ZAGREB, 8 July 2021 - The European Commission on Thursday gave a positive assessment of Croatia's recovery and resilience plan, worth €6.3 billion, which could significantly boost the country's Gross Domestic Product and create 21,000 new jobs by 2026.

The positive assessment was personally delivered by the visiting EC President Ursula von der Layen to Prime Minister Andrej Plenković in Zagreb on Thursday afternoon.

The green light from Brussels is an important step towards the EU disbursing funds in grants and loans under the Recovery and Resilience Facility (RRF).

"This is an important step towards the EU disbursing €6.3 billion in grants under the Recovery and Resilience Facility (RRF). This financing will support the implementation of the crucial investment and reform measures outlined in Croatia's recovery and resilience plan. It will play a key
role in helping Croatia emerge stronger from the COVID-19 pandemic," says the Commission.

Under the European Commission's estimates, Croatia's recovery and resilience plan could help raise the national economy by 1.5% in 2021, an additional 2.5% in each of the next four years, and by 2.9% in 2026.

In the long-term, over the next 20-year period, the plan can have a positive impact of 1.1% on the growth of GDP, without the effects of structural reforms which are supposed to increase Croatia's GDP by 15% over a 20-year period, according to a statement made by an official of the European Commission at a news conference in Brussels.

€818 million to Croatia in prefinancing

After the Commission today adopted a proposal for a decision to provide €6.3 billion in grants to Croatia under the RRF, the document was forwarded to the European Council which will now have, as a rule, four weeks to adopt the Commission's proposal. The Council's approval of the plan would allow for the disbursement of €818 million to Croatia in prefinancing. This represents 13% of the allocated grant amount for Croatia.

The EC says that it "will authorize further disbursements based on the satisfactory fulfillment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress in the implementation of the investments and reforms."

The bulk of the funding, which is about 700 million annually, will be disbursed in the first three years each.

Croatia's RRP has met all the criteria, such as that at least 37% of the allocations are spent on climate targets and at least 20% on digital transformation. Furthermore, none of the measures should adversely impact the environment.

"The Commission's assessment finds that Croatia's plan devotes 40% of its total allocation to measures that support climate objectives. These include reforms and investments to promote the uptake of renewable energy, energy efficiency and post-earthquake reconstruction of buildings, and sustainable mobility. Climate change adaptation measures include improved management of water resources and flood protection measures. The plan will also enhance the rich biodiversity in Croatia through the restoration of rivers, floodplains, and lakes. Investment support schemes will support businesses, including SMEs, in their green transition," according to the Commission's press release.

The Commission's assessment of Croatia's plan finds that it devotes 20% of total expenditure to measures that support the digital transition.

"This includes investments and reforms to support gigabit connectivity, the digitalization of public administration, transport, the judicial system, and higher education. It also provides for increasing the national broadband coverage to reduce the urban-rural digital divide and help businesses, including SMEs, adapt their operations to the digital environment thereby increasing their competitiveness."

Croatia's plan consists of 21 components

Croatia RRP is made up of 21 components plus a horizontal initiative referring to the post-quake reconstruction of buildings.

There are 22 measures envisaging 76 reforms and 146 investments, and all those measures envisage 371 key stages and targets.

Economy - the biggest component

The biggest component of the plan is the Economy and €3.4 billion is planned for this purpose.

Education, Science, and Research follow with about a billion euros. Health is highlighted as the third biggest component with €340 million, followed by Labour Market and Social Protection (€280 million).

Key measures to secure Croatia's green transition

When it comes to energy efficiency and post-earthquake reconstruction of buildings, renovating at least 225,000 square meters of residential buildings and 593,000 square meters of public buildings is planned with €789 million forecasts for that purpose.

Low-carbon energy transition includes modernizing energy infrastructure to connect 1,500 MW of renewable energy, supporting investments for the production of advanced biofuels and renewable hydrogen, financing innovative carbon capture and storage projects, and €658 million will be tapped for that purpose 

Croatia plans to improve sustainable mobility by upgrading railway lines, autonomous electric taxis with supporting infrastructure adapted for people with disabilities, installing 1,300 charging stations for electric vehicles, introducing zero-emission vehicles and vessels, and this allocation is set at €728 million.

20% investments support digital objectives

It envisages the digital transition of the public administration, digital connectivity of rural areas, and digitalization of higher education.

Concerning increasing the efficiency of the public sector and the justice system, the document envisages introducing new wage and work models in the civil service, incentivizing the merger of local government administrations, strengthening mechanisms for coordination and integration of public policies, improving the governance of state assets, reducing the backlog of pending cases and the length of court proceedings, and €200 million can be tapped for that purpose.

EC dismisses criticism about insufficient funds distributed to the private sector

Following objections of private entrepreneurs in Croatia that not enough funds would be directed to the private sector, an official of the EC has told Hina that instead of focusing on how much would be distributed to the private sector, it would be more useful to see how the money will be spent.

A considerable share will end up in private enterprises as they will take part in the implementation of investments and projects envisaged by Croatia's NRRP, say representatives of the EC.

As for the Rimac Automobili company, they explain that it will use funds under the Free Mobility Project.

This is a new project and does not amount to direct support to the company owned by Rimac, the EC official explained.

Commission President von der Leyen was quoted as saying that "with €6.3 billion, Croatia will be the largest recipient of the Recovery and Resilience Facility compared to the size of its economy."

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said that "this plan will put Croatia on the path to recovery after being hit hard both by the crisis and deadly earthquakes." The plan places a welcome focus on improving the justice system and fighting corruption. This plan will also help Croatia prepare its economy for a successful membership in the euro area, he added.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 11 June 2021 - Croatia and another four EU member-states have asked the European Commission to extend a deadline for the assessment of their national recovery and resilience plans, the Commission's spokeswoman Marta Wieczorek said in Brussels on Friday.

The EC has 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 spokeswoman said.

The extension has been requested by Croatia, Slovenia, Poland, Sweden and Romania, Wieczorek said.

The extended time frame is perceived as an opportunity to settle some outstanding issues, she said, declining to specify those outstanding issues that are the cause for the requests from the five members.

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.

For more on politics in Croatia, follow TCN's dedicated page.

ZAGREB, 15 May 2021 - The European Commission on Saturday confirmed having received national recovery and resilience plans from Croatia and Lithuania.

The plans determine reforms and public investment projects which each member-country plans to implement with the help of the Recovery and Resilience Facility.

The EC has so far received national plans from 17 member-states.

It now has two months to determine if the plans contribute to efficiently dealing with all or a significant portion of subgroups of challenges identified in relevant recommendations for individual member-countries in the context of the European Semester.

The EC will also determine if at least 37% of the outlays in the plans are intended for climate goals and at least 20% for digital transition.

After a national plan is given a passing grade, the EC sends it to the Council for adoption, for which the Council has four weeks.

The Recovery and Resilience Facility is the key part of the EU's plan for recovery from the crisis caused by the coronavirus pandemic, called the Next Generation EU. It has at its disposal €672.5 billion for support for investments and reforms in the member-states. Of that amount, €312.5 billion are grants and €360 billion are loans.

Croatia has at its disposal €6.2 billion in grants and 3.6 billion in loans.

Under Croatia's National Recovery and Resilience Plan, for the time being the country plans to use grants, while a decision as to whether loans, too, will be taken has been left for later.

Croatia's plan consists of five components and one initiative - green and digital economy; public administration and judiciary; education, science and research; labour market and social protection; and health. The initiative refers to building reconstruction.

The plan also contains measures for improving the business environment, education, research and development and the energy efficiency of buildings as well as for zero-emissions transport and development of renewable energy sources.

For more, follow our business section.

ZAGREB, 15 May 2021 - The European Commission has received Croatia's National Recovery and Resilience Plan and Prime Minister Andrej Plenković on Saturday thanked government members and all who worked on the key document for structural reforms and investments.

He tweeted that by implementing the reforms, Croatia will ensure more than HRK 47 billion in grants that will contribute to economic growth.

Croatia's plan is based on a green and digital economy; public administration and judiciary; education, science and research; the labour market and welfare; healthcare; and post-earthquake reconstruction.

The plan covers 77 reforms and 152 investments which, Plenković said earlier, will also make Croatia more resilient to future crises.

For more, follow our business section.

April the 28th, 2021 - The Croatian National Recovery and Resilience Plan, which has been met with many criticisms and questions, is set to arrive at the European Commission's door this week. 

As Poslovni Dnevnik/Ana Blaskovic writes, Portugal is the first EU member state to submit its own national recovery and resilience plan to Brussels, with twelve more countries announcing that they'll do the same by the end of the week, including Croatia - officially launching a two-month evaluation.

The formal delivery deadline for not only the Croatian National Recovery and Resilience Plan, but that of all EU member states is April the 30th.

That being said, half of the countries will still spend time ''polishing'' up their respective plans. The European Commission have stated that they'd much rather see the delivery of quality over quantity, saying on Friday: ''The plans are meant to cover the next six years, it's important that they're done properly and nothing will happen if they end up being sent later. We want EU member states to submit a ready and finished plan, not one with holes.''

Subsequent negotiations are indeed possible, they pointed out from the EC, but "for the sake of efficiency we want to limit that possibility".

Questionable projects will also enter the race...

Assessing the strategic documents of the 27 remaining EU member states is an enormous share of work for about a hundred people from several segments of the EC, and the plan of Andrej Plenkovic's government alone will boast about 700 pages when it is completed, and only a summary of about 80 pages has been published and made public, attracting attention and criticism.

In typical Croatian style, this combination of a very large volume of text and only a short time to compile it resulted in a great deal of concern and skepticism on the part of experts who worried that due to limited resources, questionable projects will end up flying under the radar.

EU member states must direct at least 37 percent of their money to the green transition, at least 20 percent to digitalisation on the principle of not causing significant damage to the climate and the environment, and the guiding thought is reforms to emerge more resilient after recovery from the ongoing coronavirus crisis.

How countries will use the available funds (in the Croatian case, 6.3 billion euros of non-refundable cash and 3.6 billion euros in loans) is left to the member states depending on the structure of their respective economies, but in line with specific recommendations issued to them (CSR).

As touched on, the Croatian National Recovery and Resilience Plan has come under significant and quite fierce criticism that too much money has been directed to the public sector and infrastructure to the detriment of the private sector. The "green" threshold has been exceeded by the majority, and in many cases the figure is over 50 percent, so Brussels estimates that this could generate around 250 billion euros in investment.

At the same time, more than 50 billion euros are to go to energy efficiency and the renovation of buildings. High on the list of priorities is green mobility, investments in railways, e-mobility, electric charging stations and the like. Many have also skipped the digital minimum, which means more than 130 billion euros will go to investments in high-speed networks, the digitalisation of public administration and even cross-border projects, of which there are many at the EU level.

Robust control systems

With coronavirus still hovering quite ominously in the foreground, as much as 28 percent of the money will go to the healthcare sectors and social cohesion; from renovating and building hospitals, to strengthening primary care and linking up the social welfare and healthcare systems.

Journalists were naturally interested in whether the fund could finance (higher) salaries in healthcare, but this isn't an option because it represents multiple costs.

The key message is the expectation that members will “establish robust spending control systems”. After the advance payment, the next tranches will depend on the fulfillment of the objectives. A missed goal means the stopping of these payments, and by that point there is very little room left for negotiations.

"The EC can decide on a partial payment, but the amount of the payment is a discretionary decision," they stated from Brussels.

For more, make sure to check out our dedicated politics section.

ZAGREB, 29 March, 2021 - Unions and employers said at Monday's meeting of the Economic and Social Council (GSV) that they were pleased with the draft 2021-23 national recovery and resilience plan, assessing it as encouraging.

Prime Minister Andrej Plenković told the press the GSV was presented with a summary of the draft plan, on which all departments had been working on for eight months now.

"It's a document containing reforms and investments amounting to €6.3 billion which is part of the Next Generation EU programme. Croatia is one of the member states that received more than the others."

He said the money involved was important so that Croatia can recover after the economic crisis caused by the pandemic and become stronger and faster in achieving the economic growth it had before the COVID crisis.

Plenković said the GSV was presented with the outlines of the national recovery and resilience plan, and that the government would endorse the information on it on Thursday and then present the plan to the press.

The intention is to finish the plan by the end of April, after which it needs to be approved by the European Commission.

"That will be followed by the payment of an advance of 13%," Plenković said, adding that "we should receive HRK 6.1 billion in August or September, to be followed by the realisation of projects through reforms."

He said some of the criteria for obtaining the funds were that 37% of all applications must contribute to the green transition and 20% to the economy's digital transition.

The criteria also include not causing significant damage in terms of climate change, greenhouse gas emissions, water protection, and the circular economy.

"In the next ten years Croatia will have €6.3 billion in grants at its disposal, then almost €13 billion in the new multiannual financial framework, another €3.6 billion in Next Generation EU loans, most probably about €1 billion for earthquake recovery, plus almost €1 billion from ReactEU and the Just Transition Fund," Plenković said.

Employers and unions say the document is encouraging

Unionist Vilim Ribić said Plenković's arrival at the GSV meeting constituted a good approach to social dialogue.

"A truly spectacular amount of money is expected," he said, adding that unions were pleased "that education has received a very relevant percentage of the funds, about 15%."

Ribić said the unionists had underlined the link between those funds and Croatia's prospects in terms of emigration and economic transformation, adding that the unions had insisted on the social aspect and on reducing inequalities in society.

Croatian Employers' Association (HUP) president Mihael Furjan said the national recovery and resilience plan summary looked encouraging and that its presentation marked the beginning of formal consultations with social partners.

"HUP is looking forward to a public consultation. We'll try, with our experience, knowledge, expertise, to help the government so that the final version of the document looks as well as possible in the interest of the Croatian economy," he said, adding that it was very important that employers and unions agreed throughout most of the discussion.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, August 30, 2020 - Prime Minister Andrej Plenkovic said on Sunday, that a blueprint of the plan for the recovery from the corona crisis could be expected in October, and added that the 15.1-percent contraction of Croatia's Gross Domestic Product in Q2 was within expectations.

The government is due to have the basic outlines of the recovery plan until 15 October, Plenkovic informed the press after a conference on the occasion of International Day of the Disappeared.

"It is our idea that we have the outlines of that plan drawn up until 15 October. After that we will fine-tune the document in communication with the European Commission, just as all other countries. The adoption of those documents is expected at the beginning of the next year," said the Croatian premier.

The recovery plan is being adjusted to the targets from our National Reforms Programmes, the Convergence Programme and the agenda of this cabinet, he added.

The sum of 22 billion euro which is put at disposal to Croatia in seven years is an excellent lever for the start of a robust economic recovery in 2021, he recalled.

Commenting on the 15.1% decline in Q2 GDP,  Plenkovic said that it was within expectations considering the COVID-19 lockdown in that period. He recalled that Q1 saw some growth and that one should wait for results in Q3 and Q4.

"This is a specific year, and globally, this (fall) is within the average of EU member-states," Plenkovic said adding that the H1 GDP was actually at -7.5%.

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ZAGREB, July 21, 2020 - EU leaders have agreed on the pandemic recovery plan and seven-year budget after marathon talks, Prime Minister Andrej Plenkovic announced on Twitter early on Tuesday morning.

"The meeting has ended #EUCO. We have adopted #NextGenerationEU and #EUBudget for the next seven years. We are bringing Croatia 22 billion euro as a guarantee of a quick economic recovery and further balanced development of the country," Plenkovic tweeted.

The EU summit lasted nearly five days. It resumed at 9.30 pm on Monday and lasted through the night.

On the table was a €1.074tn Multiannual Financial Framework and a €750bn recovery plan consisting of €390 billion in grants and €360 billion in loans.