11.9 C
Melbourne
Saturday 26 July 2025 | 3:09 PM
HomeNews and PoliticsEconomyCroatia’s public debt in focus

Croatia’s public debt in focus

Eurostat has released fresh data on public debt levels across the European Union in relation to GDP, highlighting trends in fiscal stability among member states.

As EU and NATO countries prepare to boost defence spending, understanding national debt ratios is more crucial than ever.

This article examines Croatia’s strong position, compares key EU economies, and explores future financial challenges.

Eurostat Releases New Data on Public Debt Across the EU

The European Statistical Office (Eurostat) has recently released data on the level of public debt of individual EU member states in relation to their gross domestic product (GDP).

This is an important issue, as controlling public debt can help avoid debt crises such as the one Greece once fell into—an event that shook the entire financial system and brought the country to the brink of bankruptcy.

The Eurostat building in Luxembourg

Eurozone Debt Rises Slightly in Early 2025

At the end of the first quarter of 2025, the average public debt of eurozone countries (those that have adopted the euro as their currency) stood at 88 percent of GDP.

This represents an increase of 0.6 percent compared to December of the previous year.

Croatia Performing Well on Public Debt

Croatia has been performing well in this regard for some time. During the COVID pandemic, public debt was close to 90 percent, but it has since been decreasing year after year.

According to the latest Eurostat data, it currently stands at 58.4 percent of GDP, which amounts to €50.63 billion.

For comparison, by the end of this year, Croatia’s GDP is projected to reach between €94 and €96 billion (to recall, Croatia’s total GDP in 2016 was €47 billion).

Other EU Countries Still Struggling with High Debt

Eurostat also presented data for other countries. Greece remains in the worst position. The country’s public debt exceeds GDP by just over 50 percent (i.e. debt stands at 150 percent of GDP).

Next are the Italians, who have been living on borrowed money for years but have managed to keep it under control.

Their current public debt is 137 percent of GDP. They are followed by the French.

They have also relaxed their financial discipline somewhat, and now their public debt exceeds GDP by just over 10 percent.

Spain and Belgium had debts slightly above their levels of economic activity. Portugal was at 94 percent of GDP.

Croatia Among the Most Fiscally Stable

The country closest to Croatia in terms of percentage is Poland, where debt stands at 57.4 percent of GDP.

Trends are also important – the direction of movement – whether borrowing increases year on year or declines.

In general, the borrowing ceiling within the European Union is set at 60 percent of GDP, and Croatia is well below that threshold.

Rising Defence Budgets Will Challenge Public Finances

This will become especially important in the upcoming period, as all EU countries that are also NATO members will have to increase their military budgets as part of a project to arm Europe.

The aim is to raise defence spending from the current 2 percent of GDP (in most countries) to a high 5 percent.

This will be financed through borrowing—therefore, by increasing public debt.

Favourable Loans, but No Free Ride

True, the EU will provide loans with favourable interest rates, but nothing will be free – each country will have to pay for its own military expenses.

Those with lower levels of debt, and therefore greater capacity to repay loans, will receive more favourable repayment terms.

Croatia will aim to be in this group.

Massive Defence Spending Ahead for Europe

In general, a massive amount of money will be spent on the military in Europe over the coming period.

No one will be overly frugal, as the security of individual countries is at stake, and in this context, everyone is preparing to have the most well-equipped and capable military possible.

Modern Warfare Demands Financial Stability

This is no simple task today, given the new conditions of warfare we are witnessing in Ukraine, which involve high-tech weaponry.

It is beneficial to have stable finances, as this enables a country to more easily and sustainably fund its own defence.

Website |  + posts
RELATED ARTICLES