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Zagreb - Croatia's Fiscal Policy Commission has called on the government to use the expected recovery and the lifting of coronavirus-related restrictions next year to ensure stronger consolidation of public finance and full application of fiscal rules as of 2023.
The commission met on 21 September to discuss a proposed report on the execution of the state budget in the first half of 2021, guidelines for the preparation of a 2022 budget, and budget projections for 2023 and 2024.
The commission said in a statement on Monday that the trends observed this year indicated a faster than expected recovery driven by fiscal measures aimed at alleviating the consequences of the coronavirus pandemic.
It called on the government to adjust its budget projections for 2022 to the latest trends and avoid measures with a lasting negative effect on public finance. It warned that in the circumstances of anticipated continued growth the Croatian economy might soon face limitations arising from the low potential growth rate, which should be increased through reform and investment.
That is why already next year the expected recovery and the lifting of coronavirus crisis restrictions should be used for stronger consolidation of public finance and full application of fiscal rules as of 2023.
As for the execution of the state budget in the first half of this year, the commission said that Croatia's economic activity was recovering fast and was expected to reach its pre-pandemic levels soon.