For the 2026 budget, Croatia predicts a deficit of 2.9% - 35.7 billion in revenue. Key priority, investments in the military
The Croatian government approved the draft state budget for next year, which foresees a deficit equal to 2.9% of Gross Domestic Product, the same as in 2025.
"This draft budget is approved within the framework of the government's ambitions to boost the economy and respect the principle of solidarity in Croatian society, which has been key in recent years and in the situations we have faced, from the Covid pandemic and devastating earthquakes, to the consequences of Russian aggression in Ukraine. It is about energy crises, then social pressures and inflation," said Prime Minister Andrej Plenkovic during a weekly cabinet meeting.
This is the first budget aligned with NATO's new target to increase defense spending to 3.5% of GDP and to invest an additional 1.5% of GDP in defense-related activities by 2035, Plenkovic added.
The draft budget projects economic growth of 2.7% next year, down from 3.2% expected in 2025, and inflation of 2.8%. Budget revenues are planned at 35.7 billion euros, 2.7 billion euros more than this year, while expenditures are projected to reach 39.8 billion euros, 3.0 billion euros more than the 2025 plan.
The expansion of budget revenues has been made possible by strong economic growth and high employment levels in Croatia, Plenkovic added. While the increase in expenditures is mainly related to high costs for pensions and salaries, as well as 209.9 million euros of investments in the modernization of the country's armed forces, including the purchase of the HIMARS artillery system, Baryaktar drones, Black Hawk helicopters and Leopard tanks.
The medium-term budget framework projects economic growth of 2.5% in 2027 and 2.4% in 2028, as well as a deficit equal to 2.8% of GDP for each year.
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