The consequences, they said, will have a short-term negative impact on public finances and that it is important to keep long term sustainability of public finances in mind.
The COVID-19 pandemic and measures to curb its spread is a great challenge for the global and Croatia's economy and the state of public finances, the commission said.
It noted that the rapid slowing down of economic activities will lead to a sharp decline in public revenue while at the same time the implementation of essential health interventions, bailing out and supporting a sinking economy during and in the aftermath of the epidemic will impact the growth of public spending. All that will lead to a significant increase of the budget deficit and public debt, the commission said in a press release.
The commission recalled that the Fiscal Responsibility Act and the rules of EU's Stability Pact account for the possibility of similar disruptions and provide an appropriate fiscal policy response in an effort to ease the negative consequences of the crisis.
EU Finance ministers: Conditions met for flexibility of Stability and Growth Pact
The European Commission on 20 March recommended the activation of provisions to depart from budgetary requirements to enable member states to adequately react to the crisis caused by the COVID-19 pandemic and to relieve its economic consequences.
On 23 March, the ministers confirmed that the "conditions for the use of the general escape clause of the EU fiscal framework – a severe economic downturn in the euro area or the Union as a whole – are fulfilled."
"The general escape clause will allow the Commission and the Council to undertake the necessary policy coordination measures within the framework of the Stability and Growth Pact, while departing from the budgetary requirements that would normally apply, in order to tackle the economic consequences of the pandemic," the ministers said in their statement.