ZAGREB, October 22, 2020 - If the government does not change the public policies, there will be no progress, World Bank (WB) Country Manager for Croatia Elisabetta Capannelli said in Thursday's issue of Vecernji List daily.

Boosting the efficiency of the Croatian judiciary, increasing the public administration's efficiency by streamlining administrative procedures and reducing bureaucracy and investing in education, research and development and innovation are the crucial but not the only areas of the public sphere in need of an urgent reform so that the business climate would improve and that the trust in Croatian public institutions would be strengthened, Capannelli said.

In an interview for Vecernji List she analysed the goals of Croatia's draft 2030 National Strategy and warned that economic growth could not be the only aim.

What is economic growth without justice, fairness, the voice of the people and democracy? Growth cannot be the only goal of public policy, Capannelli said.

She said that Croatia could move closer to EU averages faster, but more effort was required if we wanted to achieve stronger and more inclusive economic growth.

However, it will not succeed if it continues pursuing public policies of the past ten years in the next decade. Strategies turn into reality only when they are implemented, and Croatia has not really been successful in implementing good ideas. If the government and, what is even more important, the entire society are truly committed to implementing important reforms, Croatia can really escape the low-growth trap it is in today, Capannelli said.

ZAGREB, Sept 29, 2020 - World Bank (WB) Country Manager for Croatia, Elisabetta Capannelli and Economy and Sustainable Development Minister Tomislav Coric signed an agreement on Tuesday whereby the bank will support Croatia in transforming its waste management system, the WB stated.

As part of its technical support, the principle of circular waste management will be built into Croatia's Waste Management Plan after 2022 in line with EU directives and package of measures for circular waste management, the WB said in a press release.

Croatia is currently falling behind in achieving the EU objectives that are related to reducing the quantity of waste, mostly due to the poor technical and financial capacities of its city and municipal authorities to separate waste and encourage recycling.

The World Bank will assist in revising the existing waste management plan and recommend ways to accelerate its transformation in line with the EU's plan for a circular economy.

"In the coming years it will be challenging to respond to the objectives awaiting us and they are that by the end of 2020 we are expected to have 50% of waste paper, metal, plastic and glass separated and recycled and we have to take steps to meet those demanding objectives and to increase separated and recycled waste to 65% and decrease waste disposal to 10% by 2035," said Coric. 

Over the past three years the government has worked intensively on establishing the necessary infrastructure to establish an efficient waste management system and the results are visible at the regional and local level, he added.

Coric underlined that the agreement with the World Bank is a step further in transforming to a circular economy.

Capannelli underscored that transforming waste to a resource means a circular economy. If we repeat production, reuse and recycle waste from one sector it could be raw material for another and we will come closer to a circular economy, said the WB official.

That will help reduce health and environmental problems, reduce greenhouse emissions and avoid negative effects at the local level which devastate the local landscape with landfills and pollute the air and waters. 

The World Bank will readily provide support to Croatian institutions and cooperate with key stakeholders in creating a cleaner and more sustainable Croatia, she said.

The World Bank has been in Croatia since 1993 and in that time it has provided about $4 billion in aid for more than 50 projects.

Currently, the aid is directed to relieving the economic and social effects of the Covid-19 pandemic, helping reconstruction following the March 22 earthquake, and projects in transport, judiciary, innovation, business environment, land management, agriculture and economic development of the Slavonia region.

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ZAGREB, June 27, 2020 - The World Bank Board of Directors on Friday approved two projects totalling $500 million to provide emergency support to the Croatian authorities to cushion the effects of the triple shock that hit the country earlier this year.

The unprecedented crisis was caused by the health impacts of COVID-19; the economic crisis caused by the pandemic lockdowns in Croatia and worldwide; and the extensive damage caused by the strongest earthquake in 140 years that hit the Zagreb area on March, 22, the World Bank Office in Croatia said in a press release.

Maric: World Bank recognises Croatian gov't efforts, supports swift, targeted economic packages

The $300 million Crisis Response and Recovery Development Policy Operation supports the government’s swift and targeted economic packages approved in March and April 2020 to mitigate the economic and social impact of the COVID-19 crisis. It also addresses some of Croatia’s longstanding institutional gaps and builds the foundations of an inclusive and sustainable recovery.

"Economies around the world face a number of very demanding challenges caused by the pandemic. We are aware that the World Bank, as one of the leading international financial institutions, which represent an important source of liquidity, carefully selects the projects and programs it will support. Therefore, we are proud that among numerous requests, the Bank recognised the initiative and efforts of the Government of the Republic of Croatia by approving this important instrument that will contribute to strengthening the implementation of measures to deal with the current crisis," Finance Minister Zdravko Maric said.

The first set of measures supported by this operation will mitigate the impact of the pandemic on workers and companies.

To help Croatia during the relief stage, the World Bank is supporting wage subsidies to reduce job losses and expand free health insurance coverage for the poor. It is also providing additional liquidity to firms so they remain productive through financing programs and tax relief.

The second set of measures supports inclusive and sustainable economic recovery by addressing key institutional bottlenecks.

The program promotes income support policies for elderly people without incomes, especially elderly women, and people in rural areas. The measures also include a policy and accountability framework to promote low carbon development and resilience to climate change in line with EU targets. Administrative improvements to the framework for the absorption of EU funds are also included to enhance the efficient management of EU funds.

Two loans, worth $500 million, for economic recovery, post-quake reconstruction

"The World Bank has replied positively to Croatia’s request for support by preparing two operations that are both urgent and critical, given the magnitude of the economic crisis in Croatia, further exacerbated by the earthquake. Both the Croatia Crisis Response and Recovery Program and Earthquake Recovery and Public Health Preparedness Project - worth together $500mn or 0.9 percent of Croatia’s GDP - will help mitigate the effects of the economic shock, advance recovery, facilitate earthquake reconstruction and strengthen national systems for public health preparedness for future pandemic outbreaks," says Elisabetta Capannelli, the World Bank Country Manager for Croatia.

The $200 million Earthquake Recovery and Public Health Preparedness Emergency Recovery Project is the first big reconstruction loan for Zagreb following the devastating March earthquake.

The project will help with the reconstruction and rehabilitation of critical public services in health and education facilities. It will also help with the design of a financial support program for private housing reconstruction, to be financed through public, private, and other financiers and strengthen the institutional capacity of the national authorities to respond to future disasters and manage future risks.

The project will help the country deal with future public health outbreaks and strengthen disease surveillance systems and develop the epidemiological capacity for early detection and confirmation of diseases. It will also support the repair, rehabilitation, and reconstruction of public health laboratories, finance necessary equipment, including for active contact tracing and reporting of new cases.

Maric: Gov't reacted swiftly, established cooperation with WB

"Faced with an extremely adverse impact of the Covid-19 pandemic on the Croatian economy and the sustainability of public finances and taking into account the significant damage caused by the earthquake, the Government of the Republic Croatia reacted swiftly and engaged early with the World Bank to provide a fast and targeted response. We appreciate the World Bank's timely reaction and prompt preparation of this operation. The project will help restore critical public services and strengthen the future resilience of the health system. Given that the reconstruction of Zagreb will last for years, this project is a part of the wider Government's strategy and approach towards the reconstruction of our capital", says Maric.

The World Bank has also helped the Government to prepare a Rapid Damage and Needs Assessment (RDNA), which will be the basis for the Government's reconstruction plan, and catalyse other sources of funds, from the EU, other International Financial Institutions and Donors/Partners, for the city's reconstruction.  

"To deal with the consequences of an earthquake in addition to a pandemic is an extraordinary feat that Croatia will have to face and for which financial, technical and advisory support will be needed from all. The Rapid Damage and Needs Assessment, that the Bank has helped prepare, will help quantify the financial impact of the earthquake. While the reconstruction will be very costly, we are confident that together with the authorities and Croatia's partners, we can support a fast recovery," says Capannelli.

ZAGREB, October 24, 2019 - The latest Doing Business study, issued by the World Bank on Wednesday, shows that Croatia has continued to improve its business regulations and now ranks 51 on the ease of doing business ranking, moving up seven spots since its previous ranking.

The World Bank says that Croatia "is catching up with global regulatory best practices."

This year when the study covers 190 countries, Croatia ranks 51 on the ease of doing business, compared to 58 last year.

"The country’s ease of doing business score went up from 73.0 in the Doing Business 2019, to 73.6 in this year Doing Business 2020," the bank says.

"The European Union’s top performer in the Doing Business report is Denmark, with a score of 85.3. This year Croatia ranks closer to other EU countries such as Belgium, Slovak Republic, Netherlands and Poland."

The bank says that "Croatia implemented three reforms."

The country is praised for having made starting a business easier "by abolishing the requirements to reserve the company name and obtain director signatures for company registration, and by reducing the paid-in minimum capital requirement."

"Dealing with construction permits has become less costly by reducing the water contribution for building a warehouse. Transfer of property has become easier by decreasing the real estate transfer tax and reducing the time to register property title transfers. But Croatia also made accessing credit information more difficult by ending the distribution of individual credit data."

“We are encouraged to see Croatia improving its business regulations and narrowing the gap with the global regulatory frontier," Elisabetta Capannelli, World Bank Country Manager for Croatia, was quoted as saying.

"The Government chose to focus on easing doing business as one of its top priorities by establishing a working group under the Prime Minister’s watch and efforts made during the past year are reflected in this year’s improved ranking," Capannelli said.

"We expect to see even stronger commitment this year in areas such as starting a company and the implementation in Zagreb and at local level, of the recently launched reforms in construction permits. The World Bank’s Justice for Business Project currently under preparation with the authorities will help support the government’s reform agenda to improve the business climate," she said.

Croatia has the best score in the category of cross-border trade, maximum 100 points.

Its worst performance is in the category of issuing construction permits.

The ease of doing business ranking is topped by New Zealand, and is followed by Singapore and Hong Kong.

Denmark, South Korea, USA, Georgia, the UK, Norway and Sweden are also in the top ten performers.

More news about doing business in Croatia can be found in the Business section.

ZAGREB, July 8, 2019 - The initial results of an in-depth analysis of Croatian agriculture show that investment in agriculture is economically justified, and that 1 million dollars invested in agricultural production generates an increase of 5.19 million dollars in the value of the total volume of economic output.

The analysis was carried out by World Bank experts, who say that the Croatian agricultural sector has many comparative advantages that can be used to increase growth and development, such as unrestricted access to the EU market, access to funding under the Common Agricultural Policy, diverse agricultural and environmental conditions, good land and rich water resources, relatively low labour costs, good road infrastructure, and growing tourism.

The World Bank, however, notes that Croatia is still dependent on agricultural and food imports, while Croatian farmers use obsolete and ineffective machinery, slowly adjust to technological changes and innovations, and rarely form associations, which makes them less competitive and less adaptable to change.

The document shows that in order for the agricultural and food sector to achieve its full potential, it is necessary to make improvements in agricultural productivity and in creating added value by connecting primary production and processing.

"Agriculture and rural areas, as well as aquaculture, have huge potential for growth and development, and the structural transformation of these sectors, which in particular has been encouraged since Croatia's entry into the European Union, is going in a good direction," Agriculture Minister Tomislav Tolušić said.

He said that a strategic vision for the development of agriculture and rural areas would be finalised by the end of the year, and that a national strategic plan for the EU's Common Agricultural Policy 2021-20127 would also be prepared.

The analysis shows that Croatia is currently competitive in low-value primary agricultural products, such as cereals and oil crops (sunflower and soybean), while its competitiveness in high-value products is limited to a relatively small number of horticultural and livestock products.

The document also shows that Croatia should seize the opportunities offered by organic production because compared with other EU countries Croatia has recorded the largest increase in areas under organic production.

More news about Croatian agriculture can be found in the Business section.

ZAGREB, June 5, 2019 - The World Bank says in its latest report that Croatia's economy is likely to slow down in 2019 and 2020, warning that emerging economies in Europe and Central Asia are especially exposed to the risk of a slowdown of the activities in the euro area.

Croatia's economic activity is likely to grow at a rate at 2.5% in 2019 and 2020, according to the World Bank's Economic Prospects. Thus, Croatia's growth in 2019 and 2020 is expected to decelerate by 0.3 percentage points in comparison to the bank's report issued in January.

The initial prospects of a 2.6% rise in Croatia's economic activity in 2021 have also been revised down by 0.2 percentage points to 2.4%. "Growth in Europe and Central Asia is estimated to have slowed to 1.6% in 2019, a four-year low, partly reflecting a sharp weakening of activity in Turkey.

"Trade continues to weaken across the region, as goods trade volumes have slowed in parallel with sluggish activity in the Euro Area, the region's largest export destination," reads the report, headlined "Heightened Tensions, Subdued Investment".

The WB says that the region's outlook remains subject to significant downside risks. It also notes that "countries with large current account deficit, heavy reliance on capital inflows, or sizeable foreign-currency denominated debt – Belarus, Croatia, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Ukraine – could be subject to sudden shifts in investor sentiment. Increases in policy uncertainty could undermine business and investor confidence in the region."

"Policy disagreements between some Central European countries and the European Union, election outcomes, an escalation of international trade restrictions, and backpedalling on structural reforms could also unsettle business and investor confidence. A substantial increase in private-sector debt in the region also raises the possibility of significant contingent liabilities for the public sector."

The World Bank has also revised down forecasts for the global economy in 2019, by 0.3 percentage points, to 2.6%.

In 2020, the global economy is expected to grow at a rate of 2.7%, which is slightly lower than the January forecast. A 2.8% forecast for 2021 has been confirmed.

The Global Economic Prospects (GEP) is a twice-yearly World Bank Group flagship report that examines global economic trends and how they affect developing countries.

More economy news can be found in the Business section.

Economic growth in Europe and Central Asia slowed down to 3.1 percent in 2018, and it is predicted to fall to 2.1 percent in 2019 due to a slower rate of global growth and uncertain prospects.

As Poslovni Dnevnik writes on the 5th of April, 2019, the Croatian economy continued to grow at a rate of 2.6 percent in 2018, while in the forthcoming period from 2019-2021 moderate growth is expected at an average rate of 2.5 percent, according to the World Bank's most recent report on the latest economic trends in Europe and Central Asia (N1).

The countries of the region recorded different rates of growth. Growth at the regional level has greatly contributed to positive developments in the GDP data of Russia as the largest economy in the region, just as the accelerated growth did in Albania, Hungary, Poland, and Serbia. On the other hand, Turkey has experienced a significant slowdown in growth due to the pressure of the financial market and currency issues. Namely, in 2019, it is expected to grow by 1.0 percent, which is a significant drop compared to 7.4 percent back in 2017.

"Europe and Central Asia are vulnerable to global uncertainty and are faced with serious long-term challenges such as aging populations, a decline in productivity, a decline in investment, and climate change. It is good that there are a whole range of possible solutions available when public policies are geared towards mitigating these challenges,'' stated Cyril Muller, Vice President of the World Bank for Europe and Central Asia.

"Countries should work harder to attract investment, enhance their participation in global value chains, and ensure that more people are able to access financial services such as bank accounts and electronic payments."

Regional growth is expected to recover its power in 2020 and 2021, as it is predicted that the gradual recovery of Turkey will serve as a counterweight to the restrained activity in Central Europe as a whole. However, the long-term challenges of the region are still substantial.

Make sure to follow our dedicated business and politics pages for much more.

ZAGREB, January 9, 2019 - The World Bank has mildly increased the outlook on Croatia's economic growth this year, warning that activities in Croatia, Bulgaria and Romania are held back by softening exports and labour shortages. Croatia's economy is projected to grow 2.8% this year, the World Bank said on Tuesday. In last June's outlook, the growth was projected at 2.7%.

The World Bank projects that Croatia's economic growth in 2018 was 2.7%, revising upwards the projection from last June by 0.1 percentage points, while upholding the growth projection for 2020 at 2.8%. In 2021, growth is projected to slow down to 2.6%.

"Softening exports and labour shortages held back growth in Bulgaria, Croatia and Romania, while fiscal support and strong consumption enabled Poland to grow a faster 5 percent," the World Bank said.

As for the global economy outlook, the World Bank points to a softening of international trade and manufacturing activity around the world as well as elevated trade tensions. Therefore, it reduced global growth projections for this year and 2020 by 0.1 percentage points. The growth projection is 2.9% for 2019 and 2.8% for 2020 and 2021.

"At the beginning of 2018, the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead," said World Bank Chief Executive Officer Kristalina Georgieva.

More news on the Croatian economy can be found in our Business section.

ZAGREB, December 12, 2018 - Prime Minister Andrej Plenković met on Wednesday with the World Bank's vice president for Europe and Central Asia, Cyril Muller, the government said in a press release, adding that Croatia and World Bank would continue to cooperate in investments and reforms.

Plenković said he was pleased with the cooperation with the World Bank to date and its support for Croatia's development, as confirmed by the EUR 3.5 billion granted in loans thus far.

He underlined that the government's policy focused on fiscal consolidation, structural reforms and investments.

He said that as part of a new strategy of cooperation with the World Bank, Croatia was considering areas where cooperation could be intensified, primarily regarding viability of public finances, improving competitiveness and the business environment, and balanced regional development.

Muller said the World Bank readily responded to Plenković's invitation to become even more involved in Croatia's economic development and investment projects.

He said the World Bank continued to support Croatia in reforms, notably those aimed at improving the business environment, healthcare, the judiciary, education, agriculture and transport.

More news on Croatia's cooperation with the World Bank, as well as on other business and economic developments, can be found in our Business section.

Doing business in Croatia is always tricky, it's a long road often filled with an insane amount of paperwork and this bizarre requirement for you to physically go to multiple locations in order to get things done. Let's not forget the dreaded and archaic stamps, and the typical utter lack of desire on the faces of those apparently employed to help you. Is all that about to change with the country's gradual formation into a digital Croatia?

As Marija Brnic/Poslovni Dnevnik writes on the 29th of November, 2018, as of April the 1st next year, all those who want to start their own business in Croatia would be able to complete the process for registration and start doing business within just 48 hours. No, it isn't just an April Fools' trick.

A new business start-up system called Start will enable those who want to start their own businesses in the country to do just that, in a move which has been a deeply desired pipe dream up until now. With digital Croatia now finally on the horizon, getting your business off the ground is about to get a lot easier.

The service, which has been prepared by the Finance Agency (FINA), was finally given the green light following a government decision since last week. By the end of March next year, this system will be available to all those operating from within Croatia who own companies, including d.o.o and j.d.o.o's, while those abroad will see the service enabled for them by the end of 2019.

While start is an incredibly welcome news, it isn't the only player on the field, since 2005, Hitro.hr has been active, and is also a service from Fina. However, the Ministry of Economy, which is overseeing this project, clarified that there are some big differences between Hitro.hr and Start.

"Hitro.hr allows only the establishment of an Association or a company (obrt), or entry into the court or company register, while Start also enables the start-up of a business, which includes registration with the court and the company register, as well as entry into the register of business entities at the Central Bureau of Statistics, the filing of the beginning of the business and the beginning of the insurance with the Croatian Health Insurance Institute and the Croatian Pension Insurance Institute,the  registration of the taxpayers' register with the Tax Administration, registration in the VAT system, the opening of a bank account, and the electronic payment of any fees incurred during the process of all this,'' they explained from the Ministry of the Economy.

The beginnings of a digital Croatia will see that in the future, company owners will not physically have to go to all of the mentioned institutions as they currently need to, and all of the applications involved in this paperwork ridden and tiresome process will be able to be exported in one place by filling out a single digital form.

The establishment of this system amounts to 5 million kuna, as foreseen in the Ministry of Economy's budget, and in a year's time, it intends to back the project up with yet another half a million kuna.

Start requires automated communication and the exchange of data and documents between the ministries of economy, justice, finance, the tax administration, DZS, HZMO, HZZO, and credit institutions. Hitro.hr will not be harmed or otherwise threatened by the more than welcome launch of the Start system, as was confirmed by the Ministry of Economy, this service fulfills the objectives for which it was founded - better informing future entrepreneurs and providing better communication between people and the state administration, as well as offering far more ease and saving precious time when establishing a company.

"Hitro.hr will continue to provide services to users who need that kind of help - information ''at the counter'' and help with name reservations, or just the mere establishment of a company," the Ministry pointed out.

Fina added that if a user wants to start a business from their own home, they will beed to use Start, and if they want to start a business by going to the Hitro.hr counter and taking all the other steps individually, they will still have that option as well. Therefore, for those who prefer the "classic" Croatian way of starting a business, characterised by their physical arrival at the dreaded counter, Fina intends to keep the Hitro.hr offices open.

However, due to the ever-increasing trend in the digitisation of public services and the inclusion of newer generations in their use, Fina has also estimated that the percentage of those who prefer to use Start will grow year-by-year. Since the establishment of Hitro.hr, a large number of entrepreneurs have used it during the first step, especially when establishing a j.d.o.o., where every other such form of company since the service's introduction back in 2012, was established through Hitro.hr.

Altogether, Hitro has helped to create more than 57,000 new companies, of which some 32,000 are d.o.o.'s and 25,000 are j.d.o.o.'s. Obrt owners, however, have rarely used this registration service, since their start-up process is different, and since 2015, e-Obrt services have been introduced, which has completely taken over the registration processes of such companies.

The introduction of the Start system will not automatically open new jobs according to Fina's information. Currently, the offices of Hitro.hr are located in 61 Fina offices throughout Croatia, and information and support services are provided to them by Fina's existing employees, while as far as Start is concerned, as an online service, part of Hitro.hr staff will be engaged in staffing it via Fina.

Among the recommendations the World Bank gave to Croatia, the pressing need to create a more digital Croatia in order to improve the entrepreneurial climate was among the most outstanding, and it is precisely the creation of a unique online procedure, as opposed to the archaic dragging of one feet to numerous different offices in which processes are slow, confusing and often delayed, that will help paint a better picture of doing business in Croatia the most.

Interesting data from the analysis of Doing Business shows that starting up a business in Croatia is the easiest in Split, and there in the popular Dalmatian city are the largest number of Hitro.hr users. Out of five large Croatian cities, the worst results have rather surprisingly been recorded in Zagreb. According to Doing Business's analysis, more than half of Split's newly established companies use Hitro.hr, and for starting a business there, it is necessary to complete six individual procedures and the process typically lasts six days on average.

In Zagreb things appear bizarrely different, in the capital, a would-be entrepreneur has to complete eight different procedures and it takes a ridiculous average of three weeks for all the paperwork to be dealt with.

The welcome electronic changes that April the 1st, 2019, is set to bring owing to Start will require these procedures to be reduced in all cities across Croatia to just one step, and thanks to digital Croatia's roots finally being planted, the duration of this previously insanely time consuming process will go on for an absolute maximum of two days.

Make sure to follow our dedicated lifestyle and business pages for more information on digital Croatia and much more.

Click here for the original article by Marija Brnic for Poslovni Dnevnik