natgillin/translations-raw huggingface dataset:
Repayments of the principal of securities issued in foreign markets 
Otplate glavnice vrijednosnih papira izdanih na stranim tržištima
IX Net indebtedness (Net repayments of debt) 
IX. Neto zaduženost (neto otplate duga)
X The increase in assets on accounts [(surplus of revenues over expenses + receipts minus disbursements for loans + net indebtedness) - (surplus of expenses over revenues + disbursements minus receipts from loans + net repayments of debt)] 
X. Povećanje imovine na računima [(višak prihoda nad rashodima + primici umanjeni za isplate kredita + neto zaduženost) - (višak rashoda nad prihodima + isplate umanjene za primitke po kreditima + neto otplate duga)]
THE EFFECT OF THE FINANCIAL CRISIS ON CROATIA'S PRIMARY BUDGET DEFICIT AND PUBLIC DEBT 
UTJECAJ FINANCIJSKE KRIZE NA PRIMARNI PRORAČUNSKI DEFICIT I JAVNI DUG HRVATSKE
Faculty of Science, Zagreb 
Prirodoslovno matematički fakultet, Zagreb
JEL H63 UDC 336.27(497.5) 
JEL H63 UDK 336.27(497.5)
The basic aim of this article is to consider the effect of the current financial crisis on 
Osnovni cilj ovog rada jest razmatranje utjecaja aktualne financijske krize na kreta
the movements and sustainability of the public debt in the period up to 2013. 
nje i održivost javnog duga u razdoblju do 2013. godine.
It is shown that changes in the public debt come from the effect of the primary deficit created, stockflow adjustment, the real growth of the GDP and real interest rates. 
Pokazuje se da do promjene javnog duga dolazi zbog utjecaja ostvarenoga primarnog deficita, prilagodbe toka duga, realnog rasta BDP-a i realne kamatne stope.
On the basis of results of the European Communities (2009) a statistical estimate is given of the trends in the primary deficit for EU-12, after which the model is adjusted to Croatian figures. 
Na temelju rezultata European Communities (2009) statistički je procijenjen trend kretanja primarnog deficita za EU-12, nakon čega je model prilagođen hrvatskim podacima.
The projection of stock-flow adjustment is undertaken from a projection of the primary deficit, due to the relatively strong negative correlation between those two variables in the past, whilst the projection of the real growth rate of the GDP and real interest rates is significantly simplified. 
Projekcije prilagodbe toka duga izvode se iz projekcija primarnog deficita, zbog relativno snažne negativne korelacije tih dviju varijabli u prošlosti, dok je projekcija realne stope rasta BDP-a i realne kamatne stope znatno pojednostavnjena.
The main hypothesis tested is that the ratio of the public debt in the GDP up to 2013 does not exceed the margin of sustainability prescribed in the Maastricht criterion of 60%, which is finally confirmed by this analysis. 
Glavna testirana hipoteza jest da udio javnog duga u BDP-u do 2013. ne prelazi maastrichtskim kriterijem propisanu granicu održivosti od 60%, što je u konačnici ovom analizom i potvrđeno.
Key words: Public debt, fiscal sustainability, primary deficit, stock-flow adjustment, the Croatian economy. 
Ključne riječi: javni dug, fiskalna održivost, primarni deficit, prilagodba toka duga, hrvatsko gospodarstvo
In the period from 2002 to 2008 and especially after 2004, the indicators of the defi 
U razdoblju od 2002. do 2008, a pogotovo nakon 2004, pokazatelji deficita i javnog
cit and public debt in Croatia improved (Ministry of Finance, 2009a, 2009b). 
duga u Hrvatskoj se poboljšavaju (Ministarstvo financija, 2009a, 2009b).
I would also like to thank the Institute of Public Finance, which has provided a supportive environment for this research. 
* Autor zahvaljuje Institut za javne financije, koji je pružio potporu ovom istraživanju, posebno Katarini Ott i anonimnim recenzentima na njihovim korisnim i konstruktivnim savjetima.
In 2008 it became clear to everyone that the crisis was spreading from the mortgage market in the USA and that it would affect the rest of the world much worse than was thought. 
U 2008. godini postalo je svima jasno da se kriza s tržišta hipotekarnih kredita u SAD-u širi i da će zahvatiti ostatak svijeta mnogo jače no što se mislilo.
Most European countries already began to feel the overflow of the crisis onto their own backs at the beginning of 2008, whilst in Croatia at that time the crisis was mainly only being felt on the stock markets, which recorded significant losses, following the example of the world markets. 
Većina je europskih zemalja već početkom 2008. počela osjećati prelijevanje krize na svoja gospodarstva, dok se u Hrvatskoj u tom razdoblju kriza osjećala uglavnom samo na dioničkim tržištima, koja su, po uzoru na svjetska tržišta, bilježila velike gubitke.
It is generally known that in times of crisis state revenues decrease, whilst expenditure from the state coffers continues to increase. 
Općenito je poznato da se u kriznim vremenima prihodi države smanjuju, a izdaci iz državne blagajne i dalje se povećavaju.
This happens for several reasons: the growth of unemployment, the increasing demands for fiscal incentives, the growth of interest rates etc. All this leads to growth of the deficit, and thereby to growth of the public debt. 
Do toga dolazi zbog nekoliko razloga: rasta nezaposlenosti, sve većih zahtjeva za fiskalnim poticajima, rasta kamatnih stopa itd. Sve to vodi porastu deficita, a time i rastu javnog duga.
The main aim of this article is to consider the effect of the current financial crisis on the movements and sustainability of the public debt in the period to 2013. 
Glavni cilj ovog rada jest razmotriti utjecaj aktualne financijske krize na kretanje i održivost javnog duga do 2013. godine.
The Maastricht criterion set the margin of sustainability of the public debt in the GDP at 60%, but it should be emphasized that that margin is not necessarily any guarantee of sustainability. 
Maastrichtskim je kriterijima utvrđena granica održivosti javnog duga u BDP-u, koja iznosi 60%, no valja naglasiti da ta granica nije nužno i jamstvo održivosti.
That is to say, in as many as 55% cases of government bankruptcy the level of the public debt was below 60%, and in as many as 35% cases even below 40% (IMF, 2003). 
Naime, u čak 55% državnih bankrota razina javnog duga bila je niža od 60%, a u čak 35% bila je niža i od 40% (IMF, 2003).
This gives rise to logical questions such as: which variables have a significant influence on the movements of the public debt, how will the current financial crisis affect the movements of those variables, is there any connection between them and how great is the insecurity of future projections? 
Pritom se nameću logična pitanja poput ovih: koje sve varijable bitno utječu na kretanje javnog duga, na koji će način aktualna financijska kriza utjecati na kretanje tih varijabli, postoji li kakva veza među njima te kolika je nesigurnost budućih projekcija?
It is seen that the movements of the public debt are most significantly affected by the primary budget deficit and the stock-flow adjustment, and less, but not without significance, by the real GDP growth rate and real interest rates on the public debt. 
Pokazuje se da na kretanje javnog duga najviše utječu primarni proračunski deficit te prilagodba toka duga, a manje, ali ne nevažno, stopa rasta realnog BDP-a i realna kamatna stopa na javni dug.
It is shown statistically that Croatia's primary deficit in the period 2006-2009, with some additional alterations, follows a similar path to the primary deficit of EU-12 member states in the pre-crisis period. 
Statistički je dokazano da hrvatski primarni deficit u razdoblju 2006-2009, uz neke dodatne preinake, slijedi sličnu putanju kao i primarni deficit zemalja članica EU-12 u pretkriznim vremenima.
Adjustment of the EU-12 model leads to a projection of the Croatian primary deficit. 
Prilagodbom modela za EU-12 dobivaju se projekcije hrvatskog primarnog deficita.
A negative correlation is also shown between the variables of primary deficit and stock-flow adjustment in the past, which, under the assumption that this trend will remain the same in future, significantly facilitates the projection of the public debt 
Pokazuje se i negativna korelacija varijabli primarnog deficita i prilagodbe toka duga u prošlosti što, uz pretpostavku da će i u budućnosti taj trend ostati nepromijenjen, značajno olakšava projekcije javnog duga te modeliranje izvora nesigurnosti procjene.
The article is arranged as follows: after the introduction, the second part of the arti 
Recesijom se smatra pad gospodarske aktivnosti (desezoniziranog BDP-a) u dva uzastopna kvartala.
The fourth part links the primary deficit with the stock-flow adjustment and offers assumptions for the other variables, and then creates a projection, together with the confidence interval. 
Četvrti dio povezuje primarni deficit s prilagodbom toka duga te daje pretpostavke o ostalim varijablama, a zatim se rade projekcije, zajedno s intervalima pouzdanosti.
This is followed by a conclusion. 
Nakon toga slijedi zaključak.
Primary deficit in times of crisis 
Primarni deficit u kriznim vremenima
A financial (banking) crisis can be defined in several different ways. 
Financijska (bankarska) kriza može se definirati na nekoliko različitih načina.
which this article relies on describes a crisis as various episodes in which the financial and corporate sectors of individual states face major difficulties with the timely payment and collectability of their agreed debts, a significant increase in the number of unused loans and the exhaustion of most of the capital of the banking system. 
nicija na koju se ovaj rad oslanja opisuje krizu kao skup epizoda u kojima se financijski i korporativni sektori pojedine države suočavaju s velikim poteškoćama pravovremenog otplaćivanja, kao i naplativosti ugovornih obveza, znatnog povećanja broja neiskorištenih zajmova te iscrpljivanja većine kapitala bankarskog sustava.
Year before the beginning of the crisis 
Godina prije početka krize
Year of the end of the crisis 
Godina završetka krize
Source: European Communities (2009) 
Izvor: European Communities (2009)
During the crisis 
U doba krize
Average for the period from t-3 to t-1 
Prosjek za razdoblje od godine t-3 do godine t-1
Average for period from year t to year t+2 
Prosjek za razdoblje od godine t do godine t+2
Balance Primary balance 
Saldo Primarni saldo
Source: European Communities (2009); author's calculation 
Izvor: European Communities (2009); autorov izračun
We have seen that the occurrence and intensifying of a crisis has an important effect 
Vidjeli smo da pojava i razbuktavanje krize imaju jak utjecaj na kretanje primarnog
Here in the sample under consideration, the period of the first two years is most critical, after which there is a gradual stabilization, but full recovery to the level of the pre-crisis years can take as much as one decade. 
Pri tome je u promatranom uzorku razdoblje od prve dvije godine najkritičnije, nakon čega postupno dolazi do stabilizacije, no potpuni oporavak do razine pretkriznih godina može trajati čak i jedno desetljeće.
But can the previous experiences, considered above, be used to assess the effect of the current financial crisis? 
No mogu li se prijašnja iskustva, razmatrana u prethodnom tekstu, iskoristiti za procjenu utjecaja aktualne financijske krize?
Our desire, using the data available for the period up to 2008, and an estimate for 2009, is to offer a framework of the probable effect of the crisis on the movements of the primary deficit, and then the public debt of Croatia. 
Želja nam je, uz dostupne podatke za razdoblje do 2008. godine te uz procjenu za 2009, dati okvir vjerojatnog utjecaja krize na kretanje primarnog deficita, a zatim i javnog duga Hrvatske.
Graph 1 shows the trends in the primary budget balance which may be very well approximated by a polynomial function of the third or higher degree. 
Na grafikonu 1. prikazano je kretanje primarnoga proračunskog salda, koje se vrlo dobro može aproksimirati polinomom trećega ili višeg stupnja.
We will use a polynomial of the fifth degree in the text below, since it appears that it almost perfectly describes the data from the EU member countries in the period in question, and moreover it proves to be much better when adjusting to the Croatian figures. 
U nastavku teksta koristit ćemo se polinomom petog stupnja, jer se pokazuje da gotovo savršeno opisuje podatke zemalja članica EU u promatranom razdoblju, a osim toga, pokazuje se mnogo kvalitetnijim pri prilagodbi hrvatskim podacima.
Polynomial regression is actually a special case of multiple linear regression5, which in the case of our time series of figures may be written as the following expression: 
Polinomijalna regresija zapravo je specijalan slučaj višestruke (multiple) linearne regresije5, što se u slučaju promatranoga vremenskog niza podataka može zapisati izrazom:
where represents the vector of the primary budget balance (as a percentage of the GDP), is the vector marking the moment of time (-4,-3,…,5), βk are unknown coefficients (for k = 0,..., 5), and ε represents the vector of random errors. 
u kojemu je X vektor primarnoga proračunskog salda (u postotku BDP-a), t vektorska oznaka vremenskog trenutka (-4,-3,…,5), βk, nepoznati koeficijenti (za k = 0,..., 5), a ε vektor slučajnih pogrešaka.
With the sample given, by the method of the smallest squares the unknown parameters βk are estimated. 
Uz dani uzorak, metodom najmanjih kvadrata procjenjuju se nepoznati parametri βk.
Since the EU-12 countries are most similar to Croatia in terms of their transitional past and living standard (Eurostat, 2009b), we will consider the trend of movements of primary deficit for the EU-12 and compare it with figures for Croatia. 
S obzirom na to da su zemlje EU-12 po tranzicijskoj prošlosti i standardu najsličnije Hrvatskoj (Eurostat, 2009b), promatrat ćemo trend kretanja primarnog deficita za EU-12 te ga usporediti s podacima za Hrvatsku.
It is shown that this model, with small alterations, is really the best approximation of the primary deficit realized in Croatia for the period from 2006-2009. 
Pokazuje se da taj model, uz male preinake, doista najbolje aproksimira ostvarene primarne deficite u Hrvatskoj za razdoblje od 2006. do 2009. godine.
By an estimation of the unknown polynomial regression for the EU-12 we gain the following expression: 
Procjenom nepoznatih parametara polinomijalne regresije za EU-12 dobije se izraz:
where t signifies the year and w the vertical shift. 
Prilagodba modela hrvatskim podacima
cies may have a major effect on future trends in the primary deficit, which we will say more about later. 
Valja, međutim, naglasiti da se kvalitetnim fiskalnim potezima uvelike može utjecati na buduće kretanje primarnih deficita, o čemu će više riječi biti kasnije.
In order to find the optimal vertical shift w*, we need to find the minimum of the following expression (function g), which gives the squared deviation of the realized figures from the estimate: 
Da bismo našli optimalan vertikalni pomak w*, potrebno je pronaći minimum sljedećeg izraza (funkcije g), koji označava kvadratno odstupanje ostvarenih podataka od procjene:
create a stochastic model of those trends, with the assumption that the expected values of the future primary deficit are well described by function (5) and that the residuals (deviation of the realized from the expected values of the primary deficit for previous years) follow the standard normal distribution. 
Sada kad su nam očekivana kretanja budućih primarnih deficita poznata, željeli bismo ih stohastički modelirati, uz pretpostavke da je očekivana vrijednost budućih primarnih deficita dobro opisana funkcijom (5) te da reziduali (odstupanja ostvarenih vrijednosti primarnog deficita za prošle godine od očekivanih) prate standardnu normalnu razdiobu.
With these limitations, there is sense in assuming that the future deviations of realized values from function (5) will also be normally distributed, but since these are projections, the excepted value of the primary deficit in year t + k is formed by including the trend (function (5) with a vertical shift) in the realized values of primary deficit in year t + k − 1. 
Uz ta ograničenja ima smisla pretpostaviti da će buduća odstupanja ostvarenih vrijednosti od funkcije (5) također biti normalno distribuirana, no s obzirom na to da je riječ o projekcijama, očekivana vrijednost primarnog deficita u godini t + k formira se uključivanjem trenda (funkcija 5 s vertikalnim pomakom) na ostvarenu vrijednost primarnog deficita u godini t + k − 1.
One simulated example of forming the expected future deficit with simulated realized values, is shown in Graph 5. 
Jedan simulirani primjer formiranja očekivanja budućih deficita sa simuliranim ostvarenim vrijednostima prikazan je na grafikonu 5.
signify the last known realized value of the primary deficit (in our case this is the preliminary value for 2009). 
označava posljednju poznatu ostvarenu vrijednost primarnog deficita (u promatranom primjeru to je preliminarna vrijednost za 2009).
Then this is actually realization of the random variable Xj defined by the following expression: 
Tada je to zapravo realizacija slučajne varijable Xj, definirane izrazom:
where εt ~ N(0,1) is the standard normal error, and 
u kojemu je εt ~ N(0,1) standardno normalno odstupanje, a
f t ( ) the function defined by expres 
f t ( ) funkcija definirana izra
According to the assumptions given above, the value of the primary deficit in year t + 1 is the random variable Xt+1 given in the following expression: 
Prema navedenim pretpostavkama, vrijednost primarnog deficita u godini t + 1 slučajna je varijabla Xt+1 dana izrazom:
( ) ( ) - signifies the change in primary deficit due to the included trend. 
( ) ( ) - označava promjenu primarnog deficita zbog uključenog trenda.
And combined with formulas (6) and (7) gives: X f t 
što kombiniranjem s formulama (6) i (7) daje: X f t
f and deviation consisting of the sum of k + 1 independent standard normal random variables. 
f i odstupanjem koje čini zbroj k + 1 nezavisnih standardnih normalnih slučajnih varijabli.
Since Xt + k is also a random variable, we are interested in its distribution, and it clearly depends on the sum of errors. 
Budući da je Xt + k također slučajna varijabla, zanima nas njezina distribucija, a ona očito ovisi samo o zbroju odstupanja.
For this the known results of statistical theory will serve. 
Za to će poslužiti poznati rezultat iz statističke teorije.
Let N N μ 
Neka je N Nμ
~ ( , ) i = 1,…, m be the series of independent random variables from normal distribution. 
~ ( , ) i = 1,…, m niz nezavisnih slučajnih varijabli iz normalne distribucije.
Then the sum of those random variables is also a normal random variable with an expectation which is the sum of the expectations of all Ni and the variation which is the sum of the variations. 
Tada je zbroj tih slučajnih varijabli također normalna slučajna varijabla s očekivanjem koje je zbroj očekivanja svih Ni i s varijancom koja je zbroj varijanci, odnosno vrijedi sljedeći izraz:
From expression (9) follows in particular: 
Iz izraza (9) specijalno proizlazi:
Which in combination with the equation (8) gives: X N f t k k + +1 
što kombiniranjem s jednadžbom (8) daje: X N f t k k + +1
In other words, Xt + k is a normal random variable with expectation of 
Drugim riječima, Xt + k normalna je slučajna varijabla s očekivanjem
( ) and f t k standard deviation k+1. 
( ) i stanf t k dardnom devijacijom k+1.
We note that in this analysis we assume the Markov property of the random variable X k 
Primijetimo da u ovoj analizi pretpostavljamo Markovljevo svojstvo slučajne varijable X k
0 , that is behaviour in the future depends on the last known realized value and not on all earlier moments. 
0 , odnosno da će ponašanje u budućnosti ovisiti samo o posljednjoj poznatoj ostvarenoj vrijednosti, a ne i o svim dotadašnjim trenucima.
From formula (10) it is clear that the distributions of primary deficits for all future years have increasingly heavy tails which means that the reliability of the estimate in all future time periods is subject to increasing deviation from the expected values. 
Iz formule (10) vidljivo je da distribucija primarnog deficita za sve daljnje godine ima sve teže repove, što znači da je i pouzdanost procjene u sve daljem vremenskom razdoblju podložna sve većim odstupanjima od očekivane vrijednosti.
As a result we want to construct (1-α)% confidence intervals (for various values of α ∈ 0 1 
Zbog toga želimo konstruirati (1-α)% pouzdane intervale (za različite vrijednosti α ∈ 0 1
, ) for the primary deficit, which actually signifies the interval which, with the probability (1-α)% will contain the value of the primary deficit in each year. 
, ) za primarni deficit, što zapravo označava interval koji će s vjerojatnošću (1-α)% sadržavati vrijednost primarnog deficita u pojedinoj godini.
This may be described as follows: 
To se može zapisati na način:
ftkkzftkkz +++ standard deviation of the random variable Xt + k, a 
ftkkzftkkz +++ vijacija slučajne varijable Xt + k, a
In other words, according to this formula: 
Drugim riječima, vrijedi formula:
where Dt signifies the amount of the debt at the end of year t, Bt 
u kojoj Dt označava nominalni iznos duga s kraja godine t, Bt
Primary budget balance 
Izdaci za kamate
Changes to debt 
Prilagodba toka duga
Stock-flow adjustment (% GDP) 
Izvor: Ministarstvo financija; autorov izračun
In different years different stock-flow adjustment values are realized, and these are 
U različitim su godinama ostvarene različite vrijednosti prilagodbe toka duga, a uglav
mainly small, but still not insignificant ratios in the GDP, whether positive or negative. 
nom je riječ o malim, no ipak ne beznačajnim udjelima u BDP-u pozitivnih i negativnih predznaka.
For this reason it makes sense to assume that stock-flow adjustments have standard normal distribution. 
Stoga ima smisla pretpostaviti da su prilagodbe toka duga standardno normalno distribuirane.
But by comparison with the primary budget balance, 
kao standardnu normalnu slučajnu varijablu.
adjustment of flow debt 
primarni proračunski saldo
primary budget balance 
Izvor: autorov izračun
In years in which a primary deficit is realized, the stock-flow adjustment is mainly positive, but also the reverse. 
U godinama u kojima je ostvaren primarni deficit prilagodba toka duga uglavnom je pozitivna, ali i obratno.
This makes sense since the stock-flow adjustment depends on many external variables, and is mainly linked with market trends. 
To ima smisla jer prilagodba toka duga ovisi o mnogim eksternim varijablama, uglavnom povezanima s tržišnim kretanjima.
Therefore, we can assume that in difficult years, apart from realization of a negative budget balance, a large number of debts are also activated (e.g. guarantees), the domestic currency is liable to depreciate in relation to foreign currency, the state is forced by injections of capital to help some businesses important for economic development, which have found themselves in difficulties etc. This all leads to a growth in stock-flow adjustment and therefore the public debt. 
Stoga možemo pretpostaviti da se u teškim godinama, osim što se ostvaruje negativan proračunski saldo, aktivira i veći broj obveza (npr. jamstava), domaća je valuta sklona depreciranju u odnosu prema stranoj, država je prisiljena kapitalnim injekcijama pomoći nekim poduzećima koja su se našla u teškoćama, a važna su za razvoj gospodarstva itd. To sve dovodi do porasta prilagodbe toka duga, a time i javnog duga.
We also notice a similar connection between those two variables in EU-27 member countries, so for example in 2008 in comparison to the previous year the budget deficit rose by 1.5 percentage points, and the stock-flow adjustment by as much as 2.9 percentage points (Eurostat, 2009c). 
Sličnu povezanost tih dviju varijabli možemo primijetiti i u zemljama članicama EU-27, pa je, primjerice, u 2008. u odnosu na prethodnu godinu proračunski deficit porastao za 1,5 postotnih bodova, a prilagodba toka duga za čak 2,9 postotnih bodova (Eurostat, 2009c).
Therefore we assume that the ratio of the stock-flow adjustment can be estimated from the ratio of the primary budget balance in the GDP. 
Stoga pretpostavljamo da se udio prilagodbe toka duga može procijeniti iz udjela primarnoga proračunskog salda u BDP-u.