IMPACT OF PUBLIC DEBT ON THE ECONOMIC GROWTH OF THE REPUBLIC OF CROATIA

Transition countries need a level of supplementary external debt financing in order to further accelerate economic growth. In the Republic of Croatia, the state was the main generator of foreign debt growth, especially during the crisis period 2009-2015. The public debt to gross domestic product ratio was 84% at the end of 2016. When external debt rises above a certain level, competitiveness decreases, interest rates rise, there is instability in the national economy. The government must therefore adopt a well-balanced public finance plan in order to maintain a stable economic growth with high levels of employment and low inflation. It is imperative to improve public debt management, increase the transparency of the work of the bodies responsible for managing them, and initiate structural reforms to make them more attractive to new investments. With Croatia's accession to the European Union, merchandise exports have increased, but we are still lagging behind comparable transition countries.