The World Bank Will Focus More on Our Public Finances

The Board of Executive Directors of the World Bank Group discussed the new Partnership Strategy with the Republic of Croatia, which covers the period from July 2013 to June 2017, and which anticipates that, in accordance with Croatia’s priorities, the World Bank’s support during this period will focus on the areas of public finances, competitiveness, and EU membership, the World Bank announced today.

According to the statement, the Strategy is a key document that sets the framework for cooperation between the World Bank Group and the Croatian Government and describes the planned program of the World Bank Group in Croatia.

The new Strategy is designed to begin with Croatia’s accession to the EU, and as such, it will focus on providing assistance to Croatia to maximize the economic benefits of membership and accelerate Croatia’s convergence with the EU. In line with Croatia’s new status, the nature of the World Bank’s assistance will gradually change and shift away from financing specific projects, as it is expected that these will be financed from EU funds, and will more distinctly focus on providing technical assistance to institutions to better absorb funds from EU sources and implement the reforms necessary for an economic turnaround, the World Bank stated.

It is added that the new strategy will prioritize various aspects of ‘smart, sustainable, and inclusive growth’ as envisaged by the Europe 2020 strategy and the Government’s new reform plan, which emphasizes the fundamentals of economic governance, state institutions, the business environment, and accountability for common regional goods.

Additionally, it includes providing support to Croatia in effectively utilizing the large amount of non-repayable EU funds that will be available to it with membership.

While the previous Strategy was aimed at supporting Croatia in achieving the goal of becoming an EU member, the new one anticipates that, in accordance with Croatia’s priorities, the support of the World Bank Group in the next four-year period will focus on three thematic areas – public finances, competitiveness, and EU membership.

In the area of public finances, the World Bank will provide support for fiscal consolidation in order to accelerate the achievement of sustainable growth, with an emphasis on rationalizing expenditures to ensure fiscal sustainability in the medium term.

The Strategy also anticipates support from the World Bank in increasing Croatia’s competitiveness with a focus on necessary structural, institutional, and administrative reforms so that Croatia can keep pace with comparable countries in the EU, as well as providing assistance to Croatia to maximize the economic benefits of EU membership by increasing capacity for implementing aligned policies, absorbing significantly larger amounts from EU funds, and helping in the effective utilization of these funds.

The World Bank emphasizes that the development of the private sector is crucial for achieving Croatia’s goals, as well as supporting stable and sustainable economic development. Therefore, in the next four-year period, the International Finance Corporation (IFC), which is part of the World Bank Group, will significantly increase its program and strengthen its support for the private sector in Croatia, focusing on export companies, investments in energy efficiency and renewable energy projects, and encouraging private sector involvement in infrastructure development in Croatia.

Since becoming a member of the World Bank in 1993, Croatia has received support from the global development institution in the form of financial and technical assistance, policy advisory services, and analytical services through a total of 48 supported projects amounting to 3.3 billion US dollars and 52 grants totaling 70 million dollars. The total active loan portfolio as of June 2013 consists of 11 projects with total commitments of 775 million dollars, the World Bank stated.

It is added that, in response to increased demand for its products and services, the IFC has significantly increased its program in Croatia to 150 million dollars in fiscal year 2013, compared to 68 million dollars in fiscal year 2012. Projects financed by IFC investments in Croatia include projects in financial markets, infrastructure projects, projects in the manufacturing industry, tourism, and agriculture.

Since 1993, the IFC has invested one billion dollars in Croatia, including 300 million dollars mobilized from other partners, in 30 projects, and the current active portfolio of the IFC amounts to 192 million dollars, including financing mobilized from other partners.