ZAGREB, 6 July, 2021 - Prime Minister Andrej Plenković said on Monday that the European Commission's President Ursula Von der Leyen would arrive in Zagreb on Thursday after the European Commission approved Croatia's national recovery and resilience plan.

President von der Leyen has decided to personally deliver the national recovery and resilience plan to each of the 27 member states.

PM Plenković said that the green-light to Croatia's €6.3 billion recovery plan was an important encouragement.

"We are satisfied with the finalisation of the process before we expected," Plenković said on Monday evening.

In early June, Croatia and another four EU member-states -- Slovenia, Poland, Sweden and Romania -- asked the European Commission to extend a deadline for the assessment of their national recovery and resilience plans.

The EC had two months to assess these plans that set out the reforms and public investment projects that each Member State plans to implement with the support of the Recovery and Resilience Facility (RRF).

The rules envisage that member-states can request a reasonable extension of time for the assessment of national recovery and resilience plans after the documents are submitted.

The Commission received Croatia's plan on 15 May, and Zagreb "has requested a total of almost €6.4 billion in grants under the RRF", the EC says on its website.

The Croatian plan is structured around five components: green and digital economy, public administration and judiciary, education, science and research, labour market and social protection, healthcare. It also encompasses one initiative on building renovation.

The plan includes measures to improve business environment, education, research and development, energy-efficiency in buildings, zero-emission transport and the development of renewable energy sources.

Projects in the plan cover the entire lifetime of the RRF until 2026. The plan proposes projects in all seven European flagship areas, the EC added.

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ZAGREB, 10 May 2021 - Tourism Minister Nikolina Brnjac said on Monday the National Recovery and Resilience Plan's goal regarding tourism was to increase the sector's resilience and sustainability through green and digital transition.

Speaking in Rovinj about the development of sustainable, innovative, and resilient tourism as part of the national plan, she said another goal was to contribute to tourism's recovery from the crisis caused by the pandemic and to increase tourism's added value and indirect effects on other industries.

Investments in tourism's environmental, economic and social sustainability safeguard resources and build tourism for the long term because, she said, "in the future, we wish to be an even more successful tourist destination."

Brnjac said the national plan ensured the necessary funds "and it's up to us to carry out reforms and strategically steer the development of this important sector." She added that reforming the sector and investments were the prerequisites for utilizing the HRK 2.2 billion earmarked in the national plan for tourism until 2026.

She said the funds would be available to all tourist enterprises, both on the coast and on the continent, and that they would be awarded based on public calls, with 60% intended for direct investments in the private sector.

The rest, she added, is intended for investments in the public tourist infrastructure, but may also be used by private enterprises as part of public-private partnerships.

Tourism reform and investments are aligned with the government's strategic policies, the national reform program, and the national development strategy, Brnjac said, adding that the reform included drafting a sustainable tourism strategy until 2030, a sustainable tourism plan, and a strategic environmental impact estimate.

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ZAGREB, 7 May, 2021 - A part of the National Recovery and Resilience Plan (NPOO) refers to developing a competitive, energy sustainable and efficient transport system, and it is valued at HRK 5.5 billion, Minister of the Sea, Transport and Infrastructure Oleg Butković said on Friday.

The National Recovery and Resilience Plan totals HRK 47 billion and comprises five components, with the economy component valued at HRK 26.2 billion. That component includes a sub-component on developing a competitive, energy sustainable and efficient transport system, with investments worth HRK 5.5 billion, recalled Butković.

The plan, he said, foresees the continuation of significant investments in modernising transport infrastructure with the aim of developing a sustainable transport system and stimulating the development of smart solutions as well as  reforming rail, road and air transport as well as maritime and inland navigation.

We are prepared to make these reforms and that is an opportunity to continue the current strong investment cycle in transport infrastructure, which amounts to more than HRK 25 billion. With the resilience programme we are continuing that investment cycle which will amount to more than HRK 30 billion by 2030, particularly in railway projects as well as all the other projects, said Butković.

He announced that reforms would include amendment of the Roads Act by 2026 to create conditions for the interoperability of electronic road toll systems and improve road safety.

Answering reporters' questions, Butković said that the Hrvatske Autoceste road management company is well on its way to advertising a tender for a new contactless toll system at all motorways in the country.

He estimates that the tender could be advertised in September or October and that the new system will most likely mean the introduction of a digital vignette.

The plan also foresees the adoption of new laws on maritime zones and sea ports, on inland waterway transport and ports, and on regular and occasional sea transport to ensure uniform implementation of regulations on public port management.

The plan also includes the construction and reconstruction of railway infrastructure, the modernisation of sea ports, the procurement of three passenger ships and three catamarans, new ferry boats, trams, buses, a new photovoltaic power station, and the construction of a new Level 5 autonomous vehicle, said Butković.

According to Butković, HRK 2.8 billion of the HRK 5.5 billion planned to be invested in the transport system would be allocated to the private sector.

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ZAGREB, 29 April (Hina) - The Croatian government expects the national economy to rise at a rate of 5.2% in 2021, which is 0.3 percentage points more than its previous forecast, the government said at its meeting on Thursday when it adopted the 2022-2024 Convergence Programme.

Economic activity is expected to pick up at a rate of 6.6% in 2022.

The Convergence Programme is a document that is adopted on a regular basis in dialogue with the European Union's institutions as part of the European semester.

This year's document also deals with macroeconomic, fiscal and other economic effects of the draft National Recovery and Resilience Plan (NPOO), which was forwarded today to the European Commission for final fine-tuning.

Addressing the meeting, Finance Minister Zdravko Marić said that the effects of the NPOO raised the projected growth rate by 0.3 percentage points. Furthermore, growth of 6.6% and 4.1% is forecast for 2022 and 2023 respectively,

The finance minister said that these rates have 1.5 percentage points of the effects made by the National Recovery and Resilience Plan.

In 2024 the economy is expected to rise at a rate of 3.4%.

Marić pointed out growing commodity and services exports as a positive contribution to the growth.

Domestic consumption and investments will also give tailwinds to the growth.

2021 budget gap at 3.8% to narrow in coming years

The projections from the Convergence Programme, including the fiscal elements, will serve as an input in the preparation of the budget revision, the minister said.

Concerning the expenditure side, the minister pointed out the costs incurred due to the COVID-19 epidemic, which have reached HRK 32 billion.

He said that in 2020, HRK 14.1 billion was used to offset the pandemic and an additional 8.6 billion this year. Of that amount, the  largest portion was used for the job retention scheme, including grants for job-keeping measures, shortened working hours, and the coverage of the fixed costs of enterprises.

In the healthcare system, the COVID-related costs covered the procurement of coronavirus tests and now vaccine supplies, Marić added

Therefore, the initial plan of this year's budget gap of 2.9% has widened to 3.8% of GDP, the minister explained.

In 2022, the budget gap should be within the limits set by the Maastricht criteria (-2.6%), and in 2023 it would narrow to 1.9% and further to 1.5% in 2024, according to the minister's explanation.

Marić recalled that Croatia had left the excessive deficit procedure in 2017 and was no longer in the group of countries with excessive economic imbalances, regaining the status of a creditworthy country. He also underscored Croatia's aspirations to adopt the euro.

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ZAGREB, 29 April, 2021 - The Croatian government on Thursday adopted the Draft National Recovery and Resilience Plan (NPOO) 2021-2027, worth HRK 49 billion, and it will send it to the European Commission for final harmonisation.

The document, which has more than 1,100 pages, contains descriptions of 77 reforms and 152 investments on which EU funds will be spent. It has five components and one initiative: the business sector, with investments amounting to HRK 26.2 billion or 54% of the total amount; public administration, justice and state assets (HRK 4.36 billion or 10%); education, science and research (HRK 7.5 billion or 15%); labour market and social protection (HRK 2.09 billion or 4%); health (HRK 2.56 billion or 5%); and the initiative "Reconstruction of buildings", with planned investments amounting to HRK 5.95 billion or 12% of the NPOO funding.

Sixty-six percent of the amount or HRK 32.15 billion is intended for recovery while 34% or HRK 16.5 billion is intended for resilience.

PM Andrej Plenković said the NPOO was a key document that "will enable us to use, in the next five years, more than HRK 47 billion for structural reforms and investments that will contribute to our economic recovery and make us more resilient to future crises."

If necessary, by the end of 2023 Croatia will also be able to seek loans in the amount of around €3.6 billion or HRK 27 billion, he said.

Economic recovery primarily refers to investments in those sectors that can guarantee fast economic growth in the short and long run, as well as job preservation and job creation, said Plenković.

Each component has 'digital' and 'green' elements, the goal being to reach the targets of 20% of investments being directed to digital transformation and 37% of investments being directed towards green transition.

Macroeconomic effects

According to projections, the NPOO's effects are expected to contribute to a real GDP growth in 2021 of 5.2% instead of 4.9% without the NPOO, while growth in 2022 would be 6.6% instead of 5.2% without the NPOO, and in 2023 it would be 4.1% instead of 2.7% without the NPOO. In 2024 the effects of the NPOO would result in a 3.4% economic growth instead of 2.5%, and in 2025 it would help achieve a 2.7% growth rate instead of 2.5%.

The government expects the implementation of the NPOO to cumulatively increase GDP by an additional 4.2% in 2025 in relation to 2020.

In the last year of its implementation, 2026, the NPOO will have resulted in GDP being close to HRK 17 billion higher than it would be without the NPOO.

Concrete examples of NPOO implementation

PM Plenković said that the implementation of the NPOO would make it possible to achieve the European target share of renewables in energy consumption (for Croatia the target is 36.6%) and achieving the European target of at least 14% of renewables in the transport sector until 2026. Investments in water management are planned as well to make drinking water available to around 93% of the population.

The plan also envisages better coverage with broadband infrastructure, access to fast internet for citizens and the business sector, and reduction of the number of outstanding cases at municipal courts by at least 5% by mid-2026.

The NPOO also envisages an increase in the share of children aged between 4 and school age who are covered by early preschool education, from 81% to 96%, which is the EU target.

Also envisaged are investments to create conditions to create as many jobs as possible for the sake of increasing the employment rate from 66.7% to 70% by the end of 2024.

"Labour market reforms and policies will help provide conditions to create at least 100,000 new jobs, with emphasis on people under 30 and the self-employed," said the PM.

Investment of HRK 2.5 billion in the health system is aimed, among other things, at raising the survival rate for cancer patients from 46 to 51% and saving around 5,000 lives. Also planned is the continuation of the functional integration of hospitals.

Post-earthquake reconstruction accounts for 12% of funds expected to be obtained under the NPOO, while the projected energy consumption for heating is expected to be reduced by at least 50% for buildings renovated as part of the NPOO.

Plenković said that in the next ten years and mostly in the first five, Croatia would have at its disposal close to €30 billion from EU funds. The amount is a unique opportunity to contribute to modernisation and growth of the business sector and Croatia's social and even development, he said.

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ZAGREB, 26 April, 2021 - Transport Minister Oleg Butković said on Monday that in addition to current programmes, there is more than HRK 1 billion available from the National Recovery and Resilience Plant and the EU multiannual financial framework until 2027 for the reconstruction of the port infrastructure.

Butković visited the construction site for the modernisation and reconstruction of ports in Dubrovnik-Neretva County, including the Lapad waterfront which is being financed with a HRK 70 million grant.

"Never before has so much work been done on building and reconstructing the port infrastructure, primarily thanks to EU and national funds. This county has the most projects of this nature, eight, which are worth HRK 800 million," said Butković.

Dubrovnik Mayor Mato Franković said that the works to the Lapad waterfront should be completed in 30 months.

Dubrovnik-Neretva County Prefect Nikola Dobroslavić recalled that the county had absorbed HRK 6.7 billion in EU funds and was the most successful county in absorption. 

Minister Butković will also visit the Trpanj port, which is being reconstructed for HRK 16 million, while on the island of Korčula he will visit two breakwaters under reconstruction. In Vela Luka he will sign a contract valued at HRK 75 million for the construction of a new ferry passenger terminal.

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April 24, 2021 - Finance Minister Zdravko Marić said on Saturday that the National Recovery and Resilience Plan (NPOO) was the topic of the government's meeting earlier in the day, was a generational opportunity for Croatia.

The government is expected to endorse the plan on Thursday.

"We are going to finalize and hammer out this document at the government's session on Thursday, and we will very likely adopt the final draft of the plan which we will forward to to the European Commission for fine-tuning and evaluating," Marić told the press after today's meeting of the inner cabinet.

The procedure of evaluation and assessment of national recovery plans from Croatia and other EU member-states will take several months in Brussels, according to the minister.

Marić recalled that Croatia's national plan is about 10 billion euros, and two-thirds (6.3 billion) refer to grants. After that, the following stages are about loans for 3.6 billion euros.

Furthermore, the Multiannual Financial Framework for Croatia envisages 12 billion euros, and also there is the Solidarity Fund. All those are great financial amounts in the next few years, the minister said.

The deadline for applying projects under the recovery plan in mid-2026 and tapping funds can be until the end of that year.

The approval in Brussels would pave the way for the disbursement of a 13% pre-financing, which is about 800 million euros. After that, the amounts will be allocated to Croatia twice a year based on the fulfillment of the criteria as agreed with European institutions, Marić said.

Asked by the press about the engagement of the private sector, Marić said that the first component of the Croatian NPOO plan is about the enterprise sector, making up 50%. He added the combination of the private and public institutions pertaining to education, healthcare, public administration, judiciary, pension system, social policy, and initiatives for the post-earthquake recovery.

The direct effect concerning the private sector is 34%, and also, any investments have implications for the private sector, he said.

Croatia one of the few EU members where the plan was to public consultation

Marić dismissed criticism about a lack of transparency when it came to the document. He said that Croatia was one of the few EU member-states to have this document put to public consultation. Social partners were provided with an insight into the draft document, and a plenary session of the parliament discussed the matter.

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ZAGREB, 23 April, 2021 - The Croatian parliament on Friday adopted a report on an abridged version of the National Recovery and Resilience Plan (NPOO) to 2026 with 76 lawmakers in the 151-seat legislature supporting the document about projects worth more than HRK 49 billion.

The 2021-2026 National Recovery and Resilience Plan contains project proposals in six areas worth HRK 49.08 billion. Its drafting and submission to the European Commission is a precondition for obtaining funds from the European Recovery and Resilience Facility (RRF) for the period from 2021 to 2023. Under the RRF, Croatia has €6.3 billion in grants at its disposal, plus an additional €3.6 billion in potential loans.

The main components of the NPOO are enterprise sector; pubic administration; judiciary and state assets; education, science and research; labour market and social protection and health. Apart from the five components, there is also the initiative 'Building reconstruction' sector.

These components are divided into 22 topical sub-components that list specific reforms and investment needs.

"This is a generational opportunity," Prime Minister Andrej Plenković underscored presenting the plan to the parliament.

The plan should help us overcome the crisis as soon as possible and reforms are essential in order to absorb the available funds and they are a constituent part of the plan.

All EU member states are obliged to present their national plans by the end of April and submit them to the European Commission. After the plans are adopted 10% of the funds foreseen for each member state will be paid out in the second half of this year. Croatia can thus tap €600 million in the second half of 2021.

The investments listed in the plan have to be implemented by 31 August 2026.

Opposition parties once again complained that they did not see the entire plan but just a shortened version and that they do not believe that the plan will result in recovery or resilience.

Parliament today adopted four semi-annual reports on the absorption of European structural and investment funds for 2020 and 2019.

If all four reports are combined, we agreed projects worth more than €5 billion, (which is 45% of the funds agreed to until then) €3.02 billion has been disbursed (which is 60% of what had been paid until then) and more than €2 billion has been certified.

A report on the situation in the territory of Croatia from 2013 to 2019 was adopted as was a semi-annual report by the Croatian National Bank on the financial situation, and a report on the work of the State Commission to Supervise Public Procurement Procedures in 2019 was also adopted. 

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ZAGREB, 14 April, 2021 - The National Recovery and Resilience Plan calls for extremely transparent criteria for selecting projects and contractors, as well as defining criteria which will protect the domestic economy, the Croatian Exporters Association said on Wednesday.

One of the priorities is for hundreds of thousands of young expats to return to Croatia, the association underscored.

Croatian Exporters said that they welcomed the 2021-2026 draft national plan, aimed at strengthening economic and social resilience of the Croatia economy, that is, "mitigating the social and economic impacts of the crisis and contributing to the green and digital transition", because many of the recommendations and requests they had been sending to the government in recent years had been partially taken into account.

However, they warn that there are some questions and doubts about the planned allocation of funds for the national plan's components, 54% of which should be earmarked for the economy.

"Have key performance indicators been defined, analyses conducted and effects of planned projects on long-term sustainable and harmonised growth and development of Croatia quantified? (...) Planned investments covered by the National Plan will certainly increased Croatia's GDP in the next six to eight years, but we doubt whether it will increase the long-term GDP growth rate," Croatian Exporters said in the review they sent to the government.

They are also under the impression that the domestic production and export processing industry has been neglected in the national plan.

"Digitalisation and the green economy... won't be sufficient drivers for a big step forward in the development and progress of the domestic industry. At the same time... projects aimed at infrastructure, energy, construction and tourism won't contribute to a significant improvement in the poor structure of the Croatian economy," the exporters' association said.

They also consider that it is necessary to define criteria that will protect the domestic economy.

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ZAGREB, 14 April, 2021 - Prime Minister Andrej Plenković on Wednesday called for "the broadest possible consensus" on his government's National Recovery and Resilience Plan, a document including projects worth more than HRK 49 billion (€6.5bn) in total.

"This is a chance in a generation on which we should reach the broadest possible consensus if we can," Plenković said after presenting the document to lawmakers, rejecting claims by opposition MPs that Croatia was "begging" in the EU.

"We are not begging, but are trying to help Croatia catch up with the countries that have been in the Union longer than us, to be more efficient and faster than we were when the SDP (Social Democratic Party) was in power," the prime minister said in response to questions from SDP MPs.

The SDP's Siniša Hajdaš Dončić said that Croatia, along with Greece, has been allocated the largest amount of money per capita because it is poor. "In the six years of your government, Croatia has become what Kosovo was in the former Yugoslavia," he said.

"We have managed to obtain this amount because we think we need it. This funding will benefit both you and Croatian citizens," Plenković replied.

Željko Reiner of the ruling Croatian Democratic Union (HDZ) said: "The opposition obviously have nothing to contribute. Their thinking is reduced to two mantras: we haven't been given a full document and the money will be used for civil servants and not for the private sector."

"All the money will eventually end up in the private sector, either directly or indirectly," Plenković said.

Responding to the remark made by Domagoj Hajduković (SDP) that MPs were discussing a summary of the plan rather than the full document and that this was happening at the last minute, Plenković reiterated that theoretically the government did not have to present the document to Parliament at all. "We have prepared a good document and explained it. We have consulted the social partners and it has passed the parliamentary committees," the prime minister said.

As for the COVID-19 vaccination campaign, Plenković said that vaccination was necessary in order to bring the present public health care crisis to an end, adding that Croatia had ordered 8.7 million doses of vaccine from different manufacturers.

"We ordered as many doses as we could," Plenković said, stressing that the EU could not have known that there would be so many problems with delivery and reputational problems with some of the vaccines.

Hrvoje Zekanović (Sovereignists) was not pleased with the prime minister's answer. "I don't see why you didn't say that the EU has failed in this regard. It has proved highly inefficient during the corona crisis because there are no vaccines," he said.

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