Friday, 16 July 2021

Jehan Arulpragasam is New Director of World Bank in Croatia

July the 16th, 2021 - The new director of the World Bank in Croatia is Jehan Arulpragasam, succeeding Elisabetta Capannelli, whose four-year term expired back in June.

As Poslovni Dnevnik/Ana Blaskovic writes, the new World Bank in Croatia director, who is also taking the same position for neighbouring Slovenia, will head the Zagreb Office and oversee the strategic, analytical, operational and advisory programme of the World Bank in Croatia and Slovenia.

Jehan Arulpragasam otherwise holds a bachelor’s degree in economics from the prestigious Cornell University and then a master’s and a doctorate from the University of North Carolina, USA.

He comes to Croatia with 35 years of vast experience in the field of international development in more than 40 countries under his belt, with more than 10 years of experience in managing the World Bank's large credit and analytical programmes.

"In his work, he is focused on inclusive growth and human development, which covers a wide range of topics ranging from macroeconomic and fiscal policies to structural sectoral reforms and social policy," the statement on his arrival in Croatia said.

After the Republic of Croatia was classified as a high-income European Union country according to the World Bank criteria (which might shock a few), the institution's strategy and approach changed somewhat.

The current programme of the World Bank in Croatia is primarily focused on mitigating the economic and social consequences of the ongoing coronavirus pandemic, post-earthquake reconstruction for the City of Zagreb, Zagreb County and Sisak-Moslavina County, transport, justice, innovation, business environment, the land registry system, science and technology and the economic development of the often overlooked Pannonian Croatia.

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Wednesday, 14 July 2021

Jehan Arulpragasam New World Bank Country Manager for Croatia and Slovenia

ZAGREB, 14 July, 2021 - Economist Jehan Arulpragasam has been appointed the new World Bank Country Manager for Croatia and Slovenia, the World Bank Office in Croatia announced in a statement on Wednesday.

In this position, he will lead the World Bank Office in Zagreb and oversee the World Bank’s strategic, analytical, operational and knowledge program in both countries.

Mr. Arulpragasam is an economist with 35 years of experience working in international development in over 40 countries world-wide. His work has focused on inclusive growth and human development, covering a range of issues from macro-economic and fiscal policy to structural sector reform and social policy.

The World Bank's current program in Croatia focuses on mitigating the economic and social impact of COVID-19, post-earthquake reconstruction, transport, justice, innovation, business environment, land administration, science and technology, and economic development of the Pannonian region.

The World Bank has been a partner to Croatia for over 27 years. During this period, the Bank has supported more than 50 projects, worth almost US$5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies, the statement said.

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

Tuesday, 15 June 2021

Croatian PM Andrej Plenković Satisfied With World Bank Support in Post-Quake Reconstruction

ZAGREB, 15 June, 2021 - Prime Minister Andrej Plenković on Tuesday expressed satisfaction with the World Bank's support to Croatia's efforts to reconstruct the areas hit by the 2020 quakes, and with cooperation in projects aimed at facilitating the recovery of the private sector's exporters affected by the corona crisis. 

A press release issued by the government notes that the premier held a meeting with World Bank Vice President for Europe and Central Asia, Anna Bjerde, and a few other WB officials in Government House.

On that occasion, Plenković expressed satisfaction with the cooperation with the World Bank and the support that institution had provided to Croatia in the reconstruction since the earthquakes had struck Zagreb and Sisak-Moslavina County in March and December 2020.

He was quoted as saying that he was satisfied with the permanent cooperation in projects aimed at helping exporters in the private sector to recover from the consequences of the coronavirus pandemic.

The prime minister in particular thanked the World Bank for its support until now in preparing Croatia's 2021-2026 National Recovery and Resilience Plan. He underscored the importance of fostering further cooperation and the implementation of projects for Zagreb's reconstruction and revitalisation of the Banovina area in Sisak County, the press release said.

In June last year the World Bank approved two $500 million projects to provide urgent support to the government in an attempt to relieve the impact of the tremors that hit Croatia and of the lockdown caused by the COVID-19 pandemic.

The World Bank also provided technical support in preparing a Rapid Damage and Needs Assessment (RDNA 2020), which was an important document to mobilise €683.7 million from the EU Solidarity Fund. The World Bank also provided technical assistance in the RDNA for the earthquake-struck areas in Sisak-Moslavina County.

Bjerde was accompanied at the meeting by World Bank's Country Director for the European Union Gallina Andronova Vincelette, the World Bank's new country manager in Croatia Jehan Arulpragasam, and Special Assistant at World Bank Group Fanny Weiner.

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


Friday, 11 June 2021

WB, HBOR Ink €200 HEAL Scheme to Help Croatian Businesses to Have Access to Liquidity

ZAGREB, 11 June 2021 - The World Bank and the Croatian Bank for Reconstruction and Development (HBOR) on Friday signed a Loan Agreement for the HEAL Croatia Project (Helping Enterprises Access Liquidity) in the amount of EUR 200 million intended as support to businesses hit by the corona crisis and the 2020 quakes.

A press release issued by the WB and HBOR reads that "the COVID-19 crisis has caused a sharp decline in the economic activity of Croatian businesses and has had a profound effect on jobs and livelihoods."

"The pandemic disrupted firms’ production and reduced the demand for their goods and services, while the financial sector tightened lending to companies, due to rising credit risk. The crisis also exacerbated Croatia’s regional disparities and reduced credit access for young firms and for firms owned and managed by women."

The HEAL Croatia scheme "will provide liquidity and financial restructuring to firms that have been hit by the COVID-19 pandemic and by the two devastating earthquakes of 2020 and will support an inclusive and resilient recovery. "

The HEAL project will increase access to finance to firms focused on export, both small and medium enterprises (firms employing fewer than 250 people) and mid-caps firms (employing from 250 to 3000 people), as well as for firms from less developed regions of Croatia, and firms owned or managed by women. It will also increase access for young enterprises (operating less than five years).

HBOR management board president Tamara Perko was quoted as saying that the Croatian development bank is pleased " that the World Bank has recognized the significance of financing entrepreneur groups whose importance has also been recognized in HBOR's five-year strategy."

Elisabetta Capannelli, the World Bank Country Manager for Croatia, was quoted as saying that the World Bank looked forward "to a smooth and quick implementation of the HEAL Croatia project which will help preserve jobs and support household livelihoods through direct support to approximately 150 firms employing around 25,000 people."

Finance Minister Zdravko Marić, who signed with the World Bank a contract on loan guarantee, said that "the loan being signed today represents a continuation of the significant support provided by the World Bank to the Republic of Croatia since the beginning of the crisis in 2020, which is reflected in operations worth a total of EUR 760 million (including HEAL)."

"With this project, we are contributing to the further recovery of Croatia’s private sector, following the existing measures of the Government of the Republic of Croatia adopted in the context of the COVID-19 pandemic, post-earthquake reconstruction and creating foundations for future sustainability and resilience."

The World Bank has been a partner to Croatia for over 27 years and during that period the bank has supported more than 50 projects, worth almost US$5 billion, and provided technical assistance to help strengthen institutions and support the design of policies and strategies.

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

Thursday, 8 April 2021

STARS Project Gives Guidelines For €5 Billion Made Available to Agriculture Sector

ZAGREB, 8 April, 2021 - Documents resulting from the Strategic Transformation in Agriculture and Rural Space (STARS) project will help determine how around five billion euros that have been made available for Croatia's agricultural sector will be spent, Agriculture Minister Marija Vučković said on Thursday.

The Agriculture Ministry and the World Bank cooperated on the STARS project, and the agreement on project cooperation was signed in October 2018.

Analyses, studies and guidelines made during the project have thus been significantly used also in making a draft agricultural strategy for the period until 2030, which has been put to public consultation, and in making a national aquaculture development plan for the period 2021-2027. Both documents are aimed at enhancing the sectors' competitiveness and adapting them to current conditions.

Numerous domestic and foreign experts, sector stakeholders, employees of the Agriculture Ministry and other Croatian institutions and universities cooperated on the project, with Vučković noting that the start of work on the project had coincided with debates about the future of the EU's Common Agricultural Policy, which will affect financing priorities and development of agriculture in all member states.

The project served to reexamine the situation and needs of the Croatian farm sector, as well as the measures that are being implemented, and its documents will be used in deciding how the roughly five billion euros intended for Croatian agriculture will be used, Vučković said.

Great chances for development of Croatian farm sector

Project coordinator Svetlana Edmeades of the World Bank said that the World Bank strongly believed that Croatia had great chances for the development of its farm sector.

Farm producers have central place in the project, which identifies as national strategic goals an increase in productivity and in the resilience of farm production to climate change, stronger competitiveness of the agricultural and food sector, revival of rural economy and improving living conditions in rural areas.

Edmeades underlined the importance of knowledge and innovations, noting that the development of Croatia's agriculture should be green, resilient and inclusive, which includes, among other things, production of organic food, sector resilience to shocks, as well as greater involvement of smaller producers in existing value chains.

She said the project achievements were a number of reports that should serve as guidelines for the ministry and farm producers towards a green, resilient and inclusive agriculture.

The World Bank official said that the analyses were expected to significantly contribute to the government's programme with regard to specific targets in the farm sector, in the making of a national agricultural and rural development strategy, participation of agriculture in the national recovery and resilience plan, and national strategic planning within CAP.

Value of agricultural production to be raised to HRK 30bn by 2030 

State secretaries Tugomir Majdak, Zdravko Tušek and Šime Mršić presented the draft agricultural strategy for the period until 2030 and the national plan for the development of aquaculture in the period 2021-2027.

The officials said that the projected effects of the strategy until 2030 were an increase in labour productivity of 60% and the consequent increase in the value of farm production to HRK 30 billion, for which funds in the amount of €7.5 billion were envisaged.

This should be achieved, among other things, by a 35% increase in the number of locally bred fattening pigs, a 20% increase in cattle breeding, expanding areas under permanent crops by 5,000 hectares and areas where crops are grown under glass by 500 hectares, a 20% increase in the share of the food industry in GDP and a 30% increase in the number of producers in short supply chains.

The national plan for the development of aquaculture in the period 2021-2027, which is being made, will put emphasis on stronger competitiveness and the creation of 15% more jobs in the rural and coastal economies in the aquaculture value chain, including an increase in total production volume of 30%, a 35% increase in added value in the processing of aquaculture products, and an increase in the average annual consumption of aquaculture products per capita by as much as 50%, the Agriculture Ministry said.

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


Wednesday, 27 January 2021

World Bank Housing Security Document: Bad News for Zagreb, Rijeka Housing

January the 27th, 2021 - The World Bank has published a housing security document which looks at various potential threats to structures designed for residential purposes. Unfortunately, and following a series of terrible earthquakes, it's not the best news in the world for Zagreb and Rijeka housing.

As Poslovni Dnevnik writes, less than two months before the horrendous earthquake which hit the the Petrinja, Glina and Sisak areas struck at the end of December 2020, the World Bank published the results of a study on the risk of housing in multifamily residential buildings across Central Europe, the Balkans and Central Asia. From Croatia, the research included two cities and it looked into Zagreb and Rijeka housing, according to N1.

The cities of Rijeka and Zagreb, for which quite a significant amount of data from the March 2020 earthquake has been mentioned. The complete document published on its website by the World Bank, for two cities from Croatia, as well as for a number of other cities from the analysed areas, has a table entitled "a summary of the results of the earthquake risk assessment".

When it comes to the Croatian capital of Zagreb, 418,080 people live in family buildings built before 2000, or 52 percent of the total population. That in itself is not problematic.

The unfortunate news is that the survey found that the buildings described as the “top 2 high-risk types of buildings” have a population of 280,000, representing, it is also stated, 35 percent of the city’s total population.

When it comes to Rijeka housing, 64,260 people live in family buildings built before the year 2000, representing 54 percent of the total population, which is approximately the same ratio as has been recorded in Zagreb. A similar relationship applies to the percentage of citizens living in buildings that are described as “the top 2 high-risk types of buildings”. Rijeka is said to have 38,000 inhabitants or 32 percent of citizens living in such buildings.

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Thursday, 31 December 2020

World Bank Ready to Help Earthquake-Stricken Croatia

December the 31st, 2020 - The World Bank is ready to aid earthquake-stricken Croatia both technically and financially, as was confirmed to Poslovni Dnevnik by Elisabetta Capannelli, the World Bank's director for Slovenia and Croatia.

As Poslovni Dnevnik/Jadranka Dozan writes, Elisabetta Capannelli, stated to Poslovni Dnevnik that the World Bank had received the horrible news of the recent devastating earthquake that struck Petrinja, Sisak, Glina and the surrounding areas in continental Croatia with great sadness.

"On behalf of the World Bank, I would like to express my deepest condolences to all those affected by this tragic event, and especially to those who have lost their loved ones. Although it may seem that there will be no end to the troubles in 2020, Croatia has once again shown that it is the strongest in the most difficult moments. The unity of all Croatia's residents, their selfless willingness to help, truly arouse admiration and give hope that 2021 will be a year of improvement.

The World Bank is already cooperating with the Croatian Government on the reconstruction of the City of Zagreb and surrounding areas after the devastating earthquake which hit the country in March, and we are ready to provide additional financial and technical support in efforts to rebuild and recover the newly affected areas, as well as support the further strengthening of the national earthquake and other disaster response systems,'' Capannelli stated.

For more on earthquake-stricken Croatia and how you can help by providing financial aid, donating food, materials, sanitary and humanitarian aid, click here. To pay from either here in Croatia or from abroad to a special donation bank account set up by HPB (this method is free of additional payment charges, even if you're not a Croatian resident and are making the payment from a foreign bank account), click here.

Saturday, 27 June 2020

World Bank Grants Croatia Two Projects Worth $500 Million in Total

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.

Friday, 25 October 2019

World Bank Director Has Stark Warning for Croatia About Growth

The Republic of Croatia has improved in terms of its current distance between itself and some of the most successful countries, and real determination to implement reforms remains crucial to everything.

As Ana Blaskovic/Poslovni Dnevnik writes on the 25th of October, 2019, Croatia can only succeed if it continues to accelerate the implementation of its currently promised and planned reforms through improved focused inter-ministerial cooperation. Thus, World Bank Country Director for Croatia Elisabetta Capannelli commented on the country's position on the Doing Business 2020 ranking, on which it is positioned seven places better than it was last year. In an interview, she provides advice on how Croatia can manage to acheive even better results, but also issues a stark warning about the things standing in the way.

Croatia has been ranked in 51st place on the Doing Business 2020 ranking. What improvements have led to this shift?

We're pleased to witness the progress Croatia is making in improving its business environment and reducing its gap with the most successful countries. Croatia has improved its 'distance from the most successful' [countries], which measures the gap between a country's performance and the best global practices, from last year's score of 73 to 73.6 on the Doing Business 2020 report. This has had a positive impact on its relative placement, with it now ranking 51st among 190 economies.

In this year's rankings, Croatia is in the group of countries like Slovakia, Czech Republic, and the areas where significant changes have been recorded are the registration of ownership rights due to the reduced time required for transfer of ownership and the reduction of property sales tax, as well as starting a business by the reservation of a company name and obtaining the signature of the director as a condition for the registration of the company, and reducing the minimum amount of the basic capital.

While this placement is an important indicator in terms of the ease of doing business, ambition and determination in implementing reforms to improve the business environment is important. Gathering all parties around the table and breaking down institutional barriers is crucial for reform in areas measuring doing business, requiring the involvement of a multitude of participants, from both the public and private sectors.

I'm convinced that this year's progress is a result of the willingness to cooperate and the work of the Working Group on Improving the Business Environment, which was set up last year under the leadership of the Prime Minister in order to try to improve the business climate. With consistency, determination to implement the reform agenda to create incentives for private sector action is the only way to deliver new results.

What about the things which have become worse, and how problematic that is?

The indicators by which Croatia has fallen back in the ranking include: obtaining loans, resolving insolvency and executing contracts.

In addition, although there has been some progress in the area of ​​obtaining building permits, Croatia still ranks 150th among 190 economies. We've recently witnessed important measures and significant legislative initiatives taken by the Ministry of Construction and Physical Planning to facilitate the process of obtaining a building permit and construction itself. These key changes include reducing the number of procedures required to obtain a building permit, lower costs, and limiting the timeframe required to obtain public authority approvals.

However, problems related to the implementation and unwillingness of the City of Zagreb to accept reforms have prevented that change from being better reflected on this indicator this year. The timely implementation of such a reform could produce important results next year, and the City of Zagreb and local self-government units should make it a priority.

What should the government do to further strengthen its institutional capacity and effectiveness?

Improving the quality and efficiency of public institutions is fundamental to better service delivery and, ultimately, economic growth. Our priority is to help Croatia strengthen its institutions and support the government's effectiveness in providing services to people.

Speaking of the business environment, a more efficient public administration and justice system will be crucial to improving the business environment.

Which reforms would you highlight as the highest priority given Croatia's intention to introduce the euro?

We'll give Croatia our full support to join the Eurozone in the near future.

We share the same view as the government and the Croatian National Bank that the benefits of introducing the euro outweigh its costs. But Eurozone membership is not the solution to all of the problems, and the introduction of the euro alone is unlikely to have a significant impact on Croatia's potential for growth and convergence dynamics if Croatia fails to substantially strengthen its competitiveness and resilience.

With the introduction of the euro taking at least three to four years, Croatia has time to move forward with a bold reform program and strengthen the institutions that are crucial for successful functioning within the single currency area. Our recommendation is for Croatia to place emphasis on improving the efficiency of the public sector, reducing the state's presence in the economy and increasing the flexibility of the labour market and products, while protecting poor and vulnerable citizens and continuing to maintain fiscal sustainability.

How do you look at the recent decision to opt out of pension reforms and agree to union demands for pay increases in the public sector?

Ever since the early 2000s, the World Bank has been helping Croatia secure both the financial and social sustainability of the pension system.

We participated in the introduction of the multi-tier pension system and continue to support it. Croatia is facing unfavourable demographic trends and a strong outflow of its population. Over the next few decades, the population will decline significantly and the proportion of the elderly among the working age population could double. By abandoning the retirement age increase and deciding to reduce early retirement rates, the availability of labour and economic activity are reduced.

There are also stronger pressures on the pension system, which could lead to lower pensions or higher public debt. We certainly respect the voice of the people, and a referendum is an institute to be nurtured in a democratic society, we believe that Croatia will have to rethink its pension system in the near future.

There is no right or wrong answer to public sector wage increases. We can analyse this issue from different angles: the impact of wages on efficiency, equity, the political cycle, etc. Generally speaking, wage increases are not inherently problematic if they follow productivity trends, if they don't jeopardise fiscal sustainability, and if the economy's tax burden is reasonable. Compared to similar countries in Central and Eastern Europe and the advanced EU countries, Croatia is falling behind in terms of employee benefits. The public sector in Croatia is large and inefficient and the tax burden on the economy is high.

If we compare it with other countries in the region, does Croatia achieve the satisfactory pace of real convergence (and what happens if it fails to do so)? What would you point out as good examples for Croatia to follow?

I doubt that anyone can be satisfied with the dynamics of real convergence, when we see the progress of other comparable countries, which lagged behind Croatia in the first years of economic transition. Croatia will only reach its pre-crisis level in 2019, and many Central and Eastern European countries succeeded in doing so back in 2014.

If it doesn't improve its growth potential, it will take decades for Croatia to reach the current standard of living in the most developed EU countries. Further lagging could lead to the continuation of negative net migration as one of Croatia's currently significant problems. This would further reduce growth potential and lead to longer periods of low growth and slow convergence, if any at all. The countries of Central and Eastern Europe used their early accession to the EU to better integrate into global value chains, but - more importantly - they also improved the quality of their public and market institutions.

Do you compare today's Croatia to the Croatia of two years ago when you arrived in Zagreb, what has changed for the better or worse? Do you see any real improvement and are there areas where reforms have not even scratched the surface?

When I arrived in Croatia in mid-2017, the Agrokor crisis broke out and the government focused on preserving the stability of the economy. It took a lot of effort and daring steps, but it ultimately resulted in a successful restructuring process.

In June 2017, Croatia exited the excessive deficit procedure and we at the World Bank assisted in the restructuring of the debt of road companies. Look at where we are now. I've witnessed continued fiscal adjustment, public debt is steadily declining. Croatia's credit rating was raised to an investment level. The utilisation of EU funds has also increased; Croatia has also taken the first step towards the introduction of the euro.

This year's shift in the scale of business ease and global competitiveness indicates that some reform efforts are being made. However, difficult reforms are still pending that will profoundly change the structure of the economy, such as restructuring state-owned enterprises, transforming the railway sector, reforming the judiciary, health and public administration. There is an understanding and will to implement the reforms, but the reform agenda should be bolder and the pace of implementation faster.

What can the World Bank offer as part of its new strategy?

In May last year, the Croatian Government and the World Bank Board approved a new five-year framework for cooperation with the Republic of Croatia.

The strategy places emphasis on improving public sector institutions to better deliver services to citizens. We're just finishing the preparation of a new Education Project and, to dwell on the subject of this article, a project called Justice for Business. This project will improve the efficiency and quality of regulatory procedures (including business start-ups), reduce the administrative burden on businesses, and improve the quality of judicial services for citizens and businesses.

In addition, we plan to invest in the reconstruction and renovation of court buildings in Zagreb, Varaždin, Vinkovci and Kutina. This project is a continuation of our support to the Croatian Government to improve conditions in the country that enable the business sector to thrive and grow.

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