The World Bank is ready to provide financial and technical assistance in the implementation of Croatia’s economic recovery program, said Peter Harrold, the World Bank Director for Central Europe and the Baltic countries, in an interview with Hina.
"We placed great importance on the economic recovery program when it was announced in April. It is a bold program that outlines the reforms the government wants to implement and addresses issues, creating a framework for Croatia’s sustainable exit from recession," Harrold said in Washington at the IMF and World Bank meeting this weekend. The World Bank is prepared to provide "development financial assistance through the budget, as well as technical and analytical support" for this program, he added. "We told Minister Šuker that we are ready to provide financial support if you are serious about implementing this program because the implementation of reforms has its costs and consequences," Harrold stated. "The focus is entirely on the implementation of the program, I repeat, on the implementation," he added. When asked to assess the fiscal and monetary policy of the Croatian government in the current crisis, Harrold said that "Croatia understands that its fiscal position is not sustainable in the medium term, as the deficit is too high." The World Bank forecasts that the Croatian budget deficit in 2010 could rise to 5.4 percent of gross national product (GDP), and public debt over 52 percent of GDP, which was 45.6 billion euros in 2009.
"The public sector debt is not particularly concerning; what is a much larger figure is the total debt. They are aware of the size of the debt, and what they can do is control the public debt of the government and public enterprises to reduce the deficit, and they do not have many options in this regard," Harrold told Hina. He emphasized that the World Bank has great confidence in what the Croatian National Bank (HNB) is doing, as it "very well monitors the development of the banking system and ensures that banks’ reserves are at an appropriate level and that banks are not overly exposed." When asked about the Croatian government’s unwillingness to enter into a stand-by arrangement with the IMF to help the country exit the crisis more quickly, he replied that this is "a completely sovereign decision of each country" that largely depends on the market, i.e., whether a particular country can access funds in the market at a reasonable price. He pointed out that many countries in the region had no other choice, but many also did not seek IMF assistance, such as Slovenia, "which had an equally difficult situation as Croatia," as well as the Czech Republic, Slovakia, Estonia, Lithuania, and other countries.
