Friday, 1 July 2022

EC: Croatia to Get Less Funding from RRF Because of Speedy Recovery

ZAGREB, 1 July 2022 - Because of its speedy recovery from the consequences of the COVID-19 crisis, Croatia will receive less funding from the Recovery and Resilience Facility (RRF), based on an updated key for the award of grants to EU member states which the European Commission published on Thursday.

The Commission published a table according to which Croatia would be granted slightly over €5.5 billion from the RRF, less than the previously forecast €6.3 billion.

The key for the award of 70 percent of the national allocation was based on the population size, GDP per capita compared to the EU average and the average unemployment rate in 2015-2019 compared to the EU average. The remaining 30 percent took into account the real GDP decline during the COVID-19 crisis in 2020 and the economic activity in 2020-2021.

The new key takes into account the difference between the GDP growth estimate from the Autumn Economic Forecast 2020 and the updated data based on the real GDP in 2020-2021.

As a result, the countries that have recovered faster than expected in the Autumn Economic Forecast 2020 will get slightly less funding, and those with a slower recovery slightly more.

According to the provisional data for Croatia published by Eurostat, the Croatian economy contracted by 8.1 percent in 2020 but quickly rebounded by 10.2 percent in 2021, surpassing the pre-COVID-19 crisis level already last year, while the Commission expected this to happen in 2022.

In the Autumn Economic Forecast of 5 November 2020, which served as the basis for the calculation of national allocations, the Commission estimated that the Croatian economy would decline by 9.6 percent in 2020 and grow by 5.7 percent in 2021, and by 3.7 percent in 2022.

For more, check out our politics section.

Tuesday, 28 June 2022

Croatia Receives Largest Ever Grant from European Commission

ZAGREB, 28 June 2022 - European Commission Vice President Dubravka Šuica on Tuesday presented Prime Minister Andrej Plenković with a decision on the payment of the first installment of €700 million as part of the National Recovery and Resilience Plan, the largest grant Croatia has received from the Commission.

These are funds for reforms from the national recovery plan undertaken by 31 December 2021, including active employment measures, a program to decarbonize the energy sector, activities in the field of physical planning, labor market, and social welfare reforms, Plenković explained after meeting with Šuica.

"We have been given clear criteria defined for undertaking reforms, all those benchmarks that were important for the Commission to evaluate our achievements every six months. We can say that we are fast and efficient in this regard," said Plenković, adding that this is the largest grant that Croatia has received from the European Commission ever.

Šuica pointed out that Croatia is the sixth EU member to receive the first payment from the Commission under the Recovery and Resilience Facility. 

"That is a program that should protect the EU and its members from future possible shocks, created as a consequence of COVID-19," Šuica said.

Asked by reporters whether inflation would affect the increase in funds within the program, Šuica said that the Commission is borrowing money on the capital market and is obliged to repay it by 2059.

"There probably will not be any change, but fewer projects are likely to be made than envisaged in the national programs," Šuica said.

Finance Minister Zdravko Marić and Minister of Labour, Pension System, Family and Social Policy Marin Piletić were also present during the meeting.

Addressing the press conference after the meeting, Piletić presented a social mentoring program that will be financed from the next payment within the National Recovery and Resilience Plan.

The project envisions the training of at least 220 social workers who will be employed as social mentoring experts, and it is anticipated that the social mentoring service will be used by 30,000 beneficiaries, Piletić explained.

From 1 January 2023, that program should be up and running, and the Croatian Institute for Social Work will also be established, the goal being empowering individuals, self-activation, and motivating socially vulnerable groups, he added.

Beneficiaries will include the long-term unemployed, children from families with the guaranteed minimum allowance, people with disabilities, and victims of human trafficking.

For more, check out our politics section.

Wednesday, 1 June 2022

EC: Croatia Ready to Adopt the Euro

ZAGREB, 1 June 2022 - The European Commission on Wednesday concluded that Croatia was ready to adopt the euro on 1 January 2023, bringing the number of euro area Member States to twenty.

President of the European Commission, Ursula von der Leyen, who congratulated Croatia, was quoted as saying: "Today, Croatia has made a significant step towards adopting the euro, our common currency."

"Less than a decade after joining the EU, Croatia is now ready to join the euro area on 1 January. This will make Croatia's economy stronger, bringing benefits to its citizens, businesses and society at large. Croatia's adoption of the euro will also make the euro stronger," she said.

 The EC and the European Central Bank on Wednesday released reports on convergence assessing the progress of member-states in meeting the criteria for the admission to the euro area.

The report covers seven countries: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden. Denmark has the permanent exemption from the obligation to adopt the euro.

The EC and the ECB prepare complementary biannual reports on convergence. The reports serve as a basis for the Council's decisions on whether the aspirants meet conditions for entering the euro area.

Croatia's adoption of the euro

"In light of the Commission's assessment, and taking into account the additional factors relevant for economic integration and convergence, including balance of payments developments and integration of product, labour and financial markets, the Commission considers that Croatia fulfils the conditions for the adoption of the euro. It has therefore also adopted proposals for a Council Decision and a Council Regulation on euro introduction in Croatia."

The Council is expected to make the final decisions on Croatia's euro adoption in the first half of July, after discussions in the Eurogroup and in the European Council, and after the European Parliament and the ECB have given their opinions, reads the EC's press release.

"The Report, therefore, marks a crucial and historic step on Croatia's journey towards adopting the euro."

The Croatian kuna joined ERM II on 10 July 2020 and observes a central rate of 7.53450 to the euro with a standard fluctuation band of ±15%. This is expected to be the exchange rate for the conversion.

Croatia has participated in the ERM II since 10 July 2020. It must participate in the mechanism without severe tensions and without devaluing its central rate against the euro for at least two years before it can qualify to adopt the euro. Being part of the Exchange Rate Mechanism is intended to help non euro-area countries prepare themselves for becoming part of the euro area. It is an important milestone towards adopting the euro.

The latest report reads that Croatia meets all the four convergence criteria and Croatia's legislation is fully compatible with EMU legislation.

The average inflation rate in Croatia in the year ending in April 2022 stood at 4.7 per cent, which is below the reference value, and it is likely to remain below the reference value in the months ahead.

Concerning public finances, Croatia meets the criterion of the deficit to GDP ratio which was 2.9% in 2021, below the reference value of three percent.

The public debt to GDP ration is above the reference value, however, last year it saw a strong decrease falling from 87.3% in 2020 to 79.8%, and this marked narrowing satisfied this criterion.

For more, check out our business section.

Tuesday, 24 May 2022

EC Again Calls for Admitting Croatia, Bulgaria and Romania to Schengen

ZAGREB, 24 May 2022 - The European Commission on Tuesday reiterated its recommendation that three EU member states -- Croatia, Bulgaria, and Romania -- should be admitted to the Schengen Area after they met the membership criteria.

Today the EC presented its State of Schengen Report 2022. This is the first time the Commission is presenting such a report, following last year's Schengen Strategy.

The report also "reminds of the importance of completing the Schengen area and calls upon the Council to adopt the decisions to allow Croatia, as well as Romania and Bulgaria, to formally become a part of it, in view of the fact that all criteria have been fulfilled. The same will apply to Cyprus once it has successfully completed the Schengen evaluation process."

The State of Schengen report will serve as the basis for discussions of Members of the European Parliament and Home Affairs Ministers in the Schengen Forum on 2 June, and in the upcoming Schengen Council on 10 June.

The report sets a list of priority actions for 2022-2023 that are to be addressed at both national and European levels such as implementing the new IT architecture and interoperability for border management, making full use of cross-border cooperation tools, ensuring systematic checks at the external borders of all travelers, ensuring that Frontex reaches the full potential of its mandate, lifting all long-lasting internal border controls, and adopting the revised Schengen Borders Code.

For more, check out our politics section.

Friday, 20 May 2022

Croatian PM Meets with European Commissioner for Budget and Administration

ZAGREB, 20 May 2022 - Prime Minister Andrej Plenković met with European Commissioner for Budget and Administration Johannes Hahn in Zagreb on Friday, a government press release said.

The European Commission announced earlier in the day that it had granted Croatia an extension of the deadline for using money from the EU Solidarity Fund (EUSF) for the repair of the earthquake damage until the end of June 2023, aligning the implementation deadlines for the earthquake that struck Zagreb in March 2020 and the earthquakes that hit Sisak-Moslavina County in late December 2020 and January 2021.

Thanking the Commission for accepting the arguments made by the Croatian government, the prime minister and competent ministers informed Commissioner Hahn of the steps being taken to accelerate the use of EUSF funding so that the allocation awarded to Croatia would be successfully used within the set deadline.

Also discussed were Croatia's plans to join the Schengen Area and the euro area. Commissioner Hahn and the European Commission strongly support Croatia's ambitions, assessing that the country meets all the membership criteria, according to the press release.

Plenković and Hahn also discussed further EU assistance to and solidarity with Ukraine, the energy crisis as well as the economic and financial situation in Croatia.

The prime minister said that after a strong recovery in 2021, Croatia continued down the path of growth, public debt reduction, and financial stability, as confirmed by international credit rating agencies.

Plenković also talked about the situation in southeastern Europe, notably in Bosnia and Herzegovina. He emphasized the need to change electoral legislation in Bosnia and Herzegovina to ensure equality and legitimate political representation of the Croats as a constituent people, saying that that was the basis for Bosnia and Herzegovina to be a functioning and stable country.

Also attending were Minister of Culture and Media Nina Obuljen Koržinek and Minister of Physical Planning, Construction and State Assets Ivan Paladina.

For more, check out our politics section.

Friday, 20 May 2022

EC Grants Croatia Extension of Deadline for Using EUSF Funds for Earthquake Relief

ZAGREB, 20 May 2022 - The European Commission has granted Croatia an extension of the deadline for using money from the European Union Solidarity Fund (EUSF) for the repair of the earthquake damage.

"Today, the Commission has decided to exceptionally grant Croatia the possibility to extend until 30 June 2023 the deadline for the use of the financial contribution from the EU Solidarity Fund to compensate for the damage of the earthquakes that severely hit the country in 2020 and 2021," the Commission announced on Friday.

Croatia has been allocated over €1 billion from the Solidarity Fund to remedy the damage caused by the earthquakes that struck Zagreb in March 2020 and Sisak-Moslavina County in late December 2020 and January 2021. The usual deadline for the use of funding is 18 months, and in this case, it expires in June this year.

Prime Minister Andrej Plenković met with Commission President Ursula von der Leyen in February this year, after which it was announced that the deadline would be exceptionally extended for a year. The Commission has never before extended the usual deadline.

"Croatia was hit twice by strong earthquakes, first in Zagreb and then in the city of Petrinja and the Sisak-Moslavina county. All of that happened during the first wave of the Covid pandemic, considerably hampering the recovery efforts. Ensuring that Croatia can fully benefit from the financial support from the EU Solidarity Fund for the reconstruction of the two regions is of utmost importance for the population and a sign of strong and concrete solidarity by the European Union," said Commissioner for Cohesion and Reforms, Elisa Ferreira.

For more, check out our politics section.

Monday, 16 May 2022

EC Projects Croatian GDP Growth at 3.4%, Inflation at 6.1%

ZAGREB, 16 May 2022 - This year the Croatian economy is expected to grow by 3.4%, the employment rate should increase by 1.5% and inflation might reach 6.1% due to increases in energy and food prices, the European Commission says in its Spring 2022 Economic Forecast, released on Monday.

"After a strong rebound of the economy in 2021, with a growth rate of 10.2%, GDP growth in 2022 is expected to be more modest but still solid at 3.4% as the direct exposure of the Croatian economy to the effects of Russia’s military aggression against Ukraine is limited," the Commission said in its report.

The Commission revised its growth projection for Croatia from 4.8% predicted in the Winter Forecast, released on 10 February. As for the growth forecast for next year, the Commission retained its previous growth projection of 3.0%.

Croatia's GDP is forecast to grow by 3.4% in 2022, mostly supported by domestic demand and as the labor market is expected to stay dynamic, with employment growing by around 1.5% this year. Inflation is projected to accelerate to 6.1% in 2022, driven by rising energy and food prices, before decreasing to 2.8% in 2023.

Before the Russian invasion of Ukraine, the Commission had forecast a long and strong recovery, but the war brought about new challenges at a time when the EU economy had recovered from the consequences of the COVID-19 pandemic. That's why the Commission revised its growth forecasts for EU economies and revised up its forecasts for inflation.

The Commission says that the fiscal package adopted by the Croatian government, including direct transfers to households and SMEs and cuts in indirect taxes, should cushion the effects of rising prices on disposable incomes and corporate profits. Despite this further fiscal support to the economy, the sustainability of the key fiscal figures is expected to continue improving, with the general government deficit narrowing toward 1.8% of GDP and public debt to around 73% of GDP by 2023. In 2023 GDP is expected to grow by 3.0%.

Private consumption is forecast to grow by 2.4%, lower than previously expected, due to rising consumer prices and uncertainty, which increases precautionary savings. On the other hand, the implementation of the National Recovery and Resilience Plan (RRP), and the acceleration of post-earthquake reconstruction should push investment growth to 6.5%, despite the drag induced by the rising costs of materials, supply bottlenecks, and increased uncertainty.

Government consumption should retain its positive contribution to economic growth, with a growth rate of around 2.5%.

Exports of goods are expected to be affected by weaker demand in main trading partners, but the growth rate should remain solid, at around 5%. The growth of exports of services should be mostly driven by tourist activity, which is expected to converge towards pre-crisis levels.

Imports are projected to increase in line with final demand.

"The balance of risks to the forecast is tilted to the downside, with key negative risks stemming from the rising global uncertainties and commodity price shocks, which could affect both domestic and external demand. On the upside, the envisaged euro adoption in 2023 could benefit investments and trade, while RRP-related investments and reforms, if swiftly implemented, could more rapidly increase the growth potential of the economy," the Commission said.

After peaking at 7.6% in 2021, the unemployment rate is projected to gradually decline below 6.5% by the end of 2023.

For more, check out our politics section.

Friday, 6 May 2022

Europe Day 2022: A Weekend Full Of Activities Across Europe

06 May 2022 - Europe Day 2022 celebrates unity in Europe and the official date, the 9th of May, marks the anniversary of the historic Schuman declaration.

The 9th of May is Europe Day, and it commemorates the first move towards the creation of what has today become the European Union. This celebration recalls the importance of the role played by Robert Schuman in the start of the Coal and Steel Community and the integration process that this has triggered. 

In his historic speech, made on 9 May 1950, Robert Schuman proposed the establishment of a new form of cooperation between the countries of a European continent ravaged by the disastrous effects of two world wars.

In these challenging times, it is crucial to reappraise Schuman's life in order to take inspiration from the vision, values, and experiences of a man who sought to bring together all people of Europe under two fundamental principles: peace and solidarity. 

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Image: @European Commission/ Twitter account

This celebration also provides an opportunity to reflect on the current and real situation, which changes daily. It is a day when people can acknowledge the achievements in their everyday lives, in a European Union based on rule of law principles, popular sovereignty, and values that are now accepted and shared by the vast majority of European people. The meaning of the celebration lies in its commemoration of the path that allowed to consolidate these principles and values without taking for granted every achievement.

In honour of the pioneering work of Robert Schuman toward a united Europe, the area housing the headquarters of several European Union institutions in Brussels is named after him.

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The Fabric of Europe is a work of art born from real data-weaving representing the construction of the European Union and the governance of the Council of the European Union. You can find more here. (Image: Total Croatia News)

 

This year, the Open Day will take place on the 7th of May. For those in Brussels, tomorrow you can visit the buildings of the European Commission, the Council of the EU, and the European Parliament from 10:00 to 18:00. On-site, you will find general information about the EU with areas dedicated to the environment, digital transformation, and youth, with many games and activities for the whole family. 

There will also be several live events online on social media for those who cannot be present. 

Learn more about Europe Day and events here and also from this Factsheet.

Online and in-person events at the Council UEEuropean Commission, and the European Parliament

Explore also all the activities organised in Croatia by the Representative Office of the European Commission.

We would like to remember also that the year 2022 marks the European Year of Youth and the importance of young Europeans in achieving a better future, seeking to be greener, digital-friendly, and healthier. And if you are looking for more information about activities taking place in Croatia, contact the National Coordinator from the EU Member States by accessing this link.  

Enjoy all the activities during this European weekend all over Europe. 

Thursday, 5 May 2022

InvestEu Programme, Worth €372 Bn, Presented

ZAGREB, 5 May 2022 - The €372 billion InvestEU programme, providing the Croatian private and public sectors with opportunities for green and sustainable investments, innovation and new jobs, was presented on Thursday at a conference by the European Investment Bank and European Commission Representation in Croatia.

"InvestEU aims to provide more than €372 billion to public and private investors in the European economy in the period from 2021 to 2027. These investments will be enabled based on an EU guarantee of €26.2 billion, which will be used to support investments by InvestEU implementing partners such as the European Investment Bank (EIB)," it was said at the conference, organised by the EIB and European Commission (EC) Representation in Croatia in cooperation with the Croatian Chamber of Commerce (HGK).

The InvestEU programme builds on the successful model of mobilising investments, introduced by the Investment Plan for Europe, or the Juncker Plan, and combines the European Fund for Strategic Investments (EFSI) and 13 other EU financial instruments.

As a member of the EU, Croatia has an opportunity to accelerate its green and sustainable development based on long-term financing to be provided by InvestEU, primarily through investments in digital infrastructure, innovation, technology and skills, the EIB said in a press release.

This will empower citizens and EU economy with new generation technologies and accelerate the implementation of the EU Green Deal and "mobilise private investments for the EU's policy priorities such as the European Green Deal and the digital transition," the bank says.

The conference, held for representatives of state, public and private sectors, was addressed via video link also by Finance Minister Zdravko Marić.

The event discussed opportunities InvestEU provides and its priorities, components and available financing as well as consultancy in identifying and preparing projects, provided by the EIB Group as the lead implementing and advisory arm of the InvestEU programme.

InvestEU consists of three building blocks: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal.

EIB Vice-President Teresa Czerwinska said the programme will provide a significant stimulus to investments in many critical areas of the economy throughout the EU.

The programme is a key element of what so far is the EU's largest package of measures that will boost recovery from the COVID pandemic and will help build a greener, more digital and more resilient European economy, Czerwinska said, adding that InvestEU will also help Europe meet new challenges, including those related to the war in Ukraine.

The EIB will be a vital component in implementing the programme, which will increase investments in clean energy, education, digitisation and urban infrastructure, she said, calling on Croatia's public and private sectors to learn how to absorb as much funding as possible from this programme in cooperation with the EIB.

 

For more, check out our politics section.

Wednesday, 6 April 2022

Croatia Given Two Reasoned Opinions in April EU Law Infringement Package

ZAGREB, 6 April 2022 - Croatia on Wednesday received two reasoned opinions as part of the April package of EU law infringements, which the European Commission publishes once a month.

Together with Spain and Luxembourg, Croatia has been given a reasoned opinion for failing to ensure complete transposition into national legislation of the Directive on the Energy Performance of Buildings.

The directive introduces new elements to strengthen the existing framework, such as minimum requirements regarding the energy properties of new buildings, electromobility and charging stations, as well as new rules on heating and air conditioning system inspections.

The directive is aimed at modernising the construction sector in terms of technological improvements, and increasing the low rates of reconstruction of buildings to improve the energy efficiency of the EU housing stock.

The revised provisions should have been transposed into national legislation by 10 March 2020. In May 2020 all three member states received a formal warning over failure to transpose the directive.

After reviewing national measures, the EC considers that the transposition of the directive into national law in Croatia, Spain and Luxembourg has not been completed and is now sending them a reasoned opinion.

The countries have two months to respond and if the EC does not receive a satisfactory response, it can decide to refer their cases to the Court of the EU.

The second reasoned opinion, which Croatia received along with eight other member states, refers to the Open Data Directive.

The EC wants the nine member states to provide information on how EU rules on open data and the re-use of public sector information from the Open Data Directive have been transposed into national law.

The deadline for this expired on 17 July 2021 and the member states concerned have not stated all national measures despite formal warnings sent on 30 September 2021.

The directive, adopted on 20 June 2019, aims to use the advantages of using open data and help enable the re-use of the public sector's huge and valuable base of data resources.

This will reduce obstacles to the entry of small and medium companies into the market because costs of data re-use will be reduced, more data will be made available and new business opportunities will be created owing to the exchange of data through the Application Programming Interface.

The directive encourages the development of innovative solutions such as mobility applications, it increases transparency by enabling access to publicly funded research data and supports new technologies, including artificial intelligence. If it does not receive a satisfactory response in two months' time, the EC may decide to refer the case to the EU Court.

The EC, as the guardian of the Treaties, launches EU law infringement procedures based on its own investigations or acting on citizens', companies' or other stakeholders' complaints.

Most of the cases are resolved before they are referred to the Court of the EU.

For more, check out our dedicated politics section.

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