Croatia | World Bank

Croatia - Inland Waters Project : procurement plan

Croatia - Export Finance Intermediation Loan Project : environmental management framework

The objective of the Export Finance Intermediation Loan Project for Croatia is to support the preservation and growth of exports by providing medium- and long-term working capital and investment finance to exporters and foreign exchange earning enterprises. Negative measures include: air quality, noise, water quality, waste management, and asbestos management. Mitigation measures include: a) if asbestos material is be stored temporarily, the wastes should be securely enclosed inside closed containments and marked appropriately; b) asbestos will be handled and disposed by skilled and experienced professionals; c) before being discharged into receiving waters, effluents from individual wastewater systems must be treated in order to meet the minimal quality criteria set out by national guidelines on effluent quality and wastewater treatment; d) waste collection and disposal pathways and sites will be identified for all major waste types expected from demolition and construction activities; e) during operations the engine covers of generators, air compressors and other powered mechanical equipment should be closed, and equipment placed as far away from residential areas as possible; and f) keep demolition debris in controlled area and spray with water mist to reduce debris dust.

Croatia - Nature Protection Investment Project : procurement plan

Croatia - Fiscal, Social, and Financial Sector Development Policy Loan Project

Status of projects in execution (SOPE) - FY09 : Europe and Central Asia region - Croatia

The Status of Projects in Execution (SOPE) report for FY09 provides information on all International Bank and Rural Development (IBRD)/International Development Association (IDA) projects that were active on June 30, 2009. The report is intended to bridge the gap in information available to the public between the project appraisal document, disclosed after the Bank approves a project, and the implementation completion report, disclosed after the project closes. In addition to the project progress description, the FY09 SOPE report contains project level comparisons of disbursement estimates and actual disbursements, and a table showing the loan/credit/grant amount and disbursements to date for all active projects.

Barriers to competition in Croatia : the role of government regulation

This paper examines product market policies in Croatia by benchmarking them to OECD countries and highlighting how policies that are more conducive to competition would stimulate a more efficient allocation of resources and, in consequence, facilitate convergence to higher income levels. OECD indicators of overall regulation in product markets indicate that Croatias policies in 2007 were generally more restrictive of competition than were the policies in OECD countries. This is especially true for policies concerned with the degree of state control of the economy and with barriers to entrepreneurship. Regulatory obstacles to trade and foreign direct investment, by contrast, are in line with those of pre-accession European Union countries (Czech Republic, Hungary, Slovak Republic, and Poland in 2003, as well as Bulgaria and Romania in 2006), albeit well above the OECD average. Regulation of post, electricity, gas, telecoms, air, rail, and road transport, as estimated by the OECD energy transport and communication sectors indicator, is also less liberal than in the OECD, highlighting the positive knock-on effects for the rest of the economy that could derive from further liberalization of network industries.

Croatia - Disaster Risk Mitigation and Adaptation Project

Croatia - First Development Policy Loan Project

Croatia - Social Welfare Development Project : restructuring

The objective of the Social Welfare Development Project for Croatia is to strengthen the quality of social services and improve administration, planning and policy making of the social welfare system. The restructuring will correct the original mismatch between the Project Development Objective (PDO), the Results Framework (RF), and the project activities which have been under implementation during the last three years. Firstly, the PDO makes reference to improved targeting and administrative simplicity of social benefits, and there are two corresponding outcome indicators, one aiming at 5-10 percent increase in all targeted social benefits that reaches the bottom quintile of the population, and the other referring to improved targeting and administrative simplicity through streamlined benefit entitlements in the social welfare act. However, the project activities, with the exception of one small consultancy, have had no direct impact on achieving improved targeting and administrative efficiency of social benefits. This objective was intended to be achieved through the Second Programmatic Adjustment Loan (PAL II), which had one specific condition on improving targeting of social benefits, and was not achieved under that operation. Secondly, the outcome indicator on annual reduction of referrals to resident institutions by 10 percent, starting from 2008, is not attributable to the project, as the project activities did not foresee any transformation of and reduction in the capacity of social welfare residential institutions. Also, several intermediate results indicators related to inappropriate outcome indicators needed to be dropped, revised, and replaced by new indicators to reflect the intended project results.

Croatia - Second Rijeka Gateway Project : procurement plan

Croatia - Export Finance Intermediation Loan Project

The objective of the Export Finance Intermediation Loan Project for Croatia is to support the preservation and growth of exports by providing medium- and long-term working capital and investment finance to exporters and foreign exchange earning enterprises. The Croatia Export Finance Intermediation Loan (CEFIL) is a single component project consisting of a credit line to Croatian Bank for Reconstruction and Development (HBOR) as the Borrower and implementing agency. HBOR will wholesale the funds to private banking institutions (Participating Financial Intermediaries or PFIs), which in turn will on-lend to eligible private exporters and quasi-exporters such as the tourism and logistics sector. The envisaged project is to be implemented through HBOR's credit division. Its responsibilities will include: (i) on-lending to PFIs for final lending to sub-borrowers; (ii) ensure effective functioning of the on-lending facility to final borrowers through PFIs; (iii) on-going monitoring of the PFIs to ensure compliance with project criteria; (iv) responsibility for adherence to all fiduciary and safeguard requirements of the World Bank for final sub-borrowers; and (v) monitoring and evaluation based on key project development indicators.

Croatia - Science and Technology Project : restructuring

The objective of the Science and Technology Project for Croatia are: (a) to enable research and development (R&D) institutions to commercialize research outputs; and (b) to increase the ability of enterprises, particularly small and medium sized companies, to invest in R&D activities. The changes are: (i) revised Project Development Objective (PDO) and associated outcome indicators, removing the objective of restructuring research and development institutions and therefore focusing on the objectives of enabling the commercialization of public research and fostering private sector R&D; and (ii) the extension of the closing date of the project from November 30, 2009 to May 31, 2011 and the reallocation of loan funds between disbursement categories, cancelling the sub-component related to the creation of a venture capital fund (VENCRO) and increasing the allocation to programs that directly and indirectly support business R&D.

Croatia - Development of the Emergency Medical Services and Investment Planning Project : procurement plan

Croatia - First and Second Programmatic Adjustment Loan Project

Ratings for the First and Second Programmatic Adjustment Loan (PAL) Project for Croatia were as follows: outcomes were moderately satisfactory, the risk to development outcome was substantial, the Bank performance was moderately satisfactory, and the Borrower performance was also moderately satisfactory. Some lessons learned included: policy based lending operations should be conducted in ways that reinforce government ownership and political support for the reform program. The experience with Croatia's PAL program demonstrates once again the lesson that smooth and successful program implementation depends critically on government ownership, including the government's ability to maintain adequate political support for the program. But the experience also suggests that it is possible to achieve significant positive outcomes from an ambitious program even when the government is not able to maintain sufficient support to implement all aspects of the program fully. It is worth considering several ways in which the PAL program sought to contribute to these positive outcomes by reinforcing government ownership and containing the political risks. The PAL program was closely aligned both to the government's own program and to the European Union (EU) accession agenda, in addition to reflecting the Bank's analytical work. The linkage of the program to the goal of EU accession, along with EU and Bank support, was intended to help the government offset pressures to delay needed reforms.

Croatia - Pension System Investment Project

Ratings for the Pension System Investment Project for Croatia were as follows: outcomes were moderately satisfactory, the risk to development outcome was low or negligible, Bank performance was moderately satisfactory, and Borrower performance was moderately unsatisfactory. Some lessons learned included: it is important to thoroughly assess commitment by all the institutions involved as the absence of a full buy-in by all the institutions may negatively affect the achievement of project objectives. Consensus building among the stakeholders is critical to the success and sustainability of any pension reform. It is important to correctly assess the capacity of the institutions to implement reforms identified in the project. Project teams should agree on a set of well-defined relevant indicators and carefully monitor them during project implementation. A well planned institutional strategy can support the creation of well functioning institutions.

Croatia - Export Finance Intermediation Loan Project

Croatia - Social and Economic Recovery Project : restructuring

The objective of the Social and Economic Recovery Project for Croatia is to support the economic and social revitalization of disadvantaged and war-affected areas as a way to increase social cohesion in the areas of special state concern. The main reason for restructuring this investment is to improve the results framework in order to allow the Republic of Croatia (the borrower) to adequately assess the extent to which the project development objective (PDO) is being met. The restructuring also provides an opportunity to inform the Board of two additional changes to the project. First, funds of 1.5 million from the 'capacity building for cooperative development and Small and Medium Enterprise (SME) support services' under the economic revitalization subcomponent have been reallocated to another activity within the economic revitalization subcomponent because this capacity building has already been funded and implemented by the borrower, other donors, and the project implementation unit. This support has yielded positive results as SME, and cooperatives have so far demonstrated their capacity to prepare and implement good projects. The second change is the extension of the project closing date to June 30, 2010. The borrower requested an extension of the project closing date to facilitate the successful completion of community investment subprojects and to improve the monitoring and evaluation of project outcomes.

Overview

Croatia's economic and social achievements over the last decade, when compared to those of upper middle-income countries, look remarkable. High and sustained rates of economic growth, at a time when the size of population was in decline, resulted in consistent growth in per capita income over the 1994-2008 period. As a result, per capita income converged, and converged fast, partly as a result of the catch-up effect after the dramatic drop in the early 1990s, with levels in the richest economies. More broadly, Croatia substantially improved its macroeconomic framework; kept its social indicators among the highest in Eastern Europe; and is concluding its process of accession to the European Union (EU). This report discusses how Croatia could sustain and accelerate growth over the coming decades. Four economic policy strategies are discussed: (i) increasing the contribution of labor, by raising the rate of the population's participation in the workforce and reducing unemployment; (ii) raising total factor productivity (efficiency); (iii) deepening trade integration; and (iv) fostering innovation. The four economic strategies engender different dividends in terms of economic growth. They also create different distributional impacts, and for this reason pose distinct challenges in terms of political economy. While the report discusses the pros and cons of the different policy strategies, identifying a politically feasible 'policy bundle' that should be adopted in practice is ultimately a consensus-building exercise that goes beyond the scope of this report.

Full report

Transition since Fall of Berlin Wall Shapes Today’s Crisis and Recovery

2009-11-03T17:05:11.000Z

Report on eve of 20th anniversary of the Berlin Wall's fall says structural reforms are now necessary to protect hard-won gains

WASHINGTON, November 3, 2009―The economic policy choices made by some countries of Europe and Central Asia (ECA)* during the transition from centrally planned to market economies contained the seeds of vulnerability when facing the global economic crisis, and are also likely to shape the recovery, says a new World Bank report issued on the eve of the 20th anniversary of the fall of the Berlin Wall.

The report, Turmoil at Twenty: Recession, Recovery, and Reform in Central and Eastern Europe and the former Soviet Union, says many countries in ECA are well integrated today into global markets. While this integration brought many benefits and drove the region’s spectacular growth in the decade since the Russia financial crisis of 1998, it also exposed ECA countries to three channels through which the crisis has hit the region hard: financial, market, and labor.

Excessively rapid catch-up towards Western European living standards by countries that had suffered deep or double transition recessions in the late 1990s, enabled by bank lending at a time of unusually high global liquidity, led to rapid growth, but also created serious macroeconomic imbalances when facing the 2008-09 global crisis. Short-term maturing debt reached extremely high values. But not all financially integrated countries in the region were equally vulnerable. Their experience suggests that tighter fiscal policies, without necessarily insulating countries from the crisis, could have played a stabilizing role, even though the imbalances did not generally originate in the public sector.

The report says that international collective action comprising generous official financing and coordination by Western European parent banks to maintain their exposures in Central and Eastern Europe has allowed maturing external debt to be rolled over, at least so far. Those parent banks were crucial in hardening budget constraints and attaining macroeconomic stability during the first decade of transition.

“The outlook for economic growth in emerging Europe and Central Asia is considerably weaker than that in the years before the crisis,” said Pradeep Mitra, one of the authors of the report and former World Bank Chief Economist of the Europe and Central Asia Region. “If parent banks reduce exposures in countries of the region due to recognition of losses in their home market, continuing collective action will be necessary to make this process gradual and less disruptive.”

According to the report, the weak outlook for growth highlights the urgency of proceeding with bank, corporate, and household debt restructuring. Government should set up enabling frameworks for debt restructuring, but resist using public resources since household debt is typically not concentrated among the poorer households.

The poorer countries of the former Soviet Union that are financially less integrated are experiencing the crisis primarily as a result of a downturn in exports and decline in workers’ remittances due to the recession in the Russian Federation. Thus, in Tajikistan, the poorest country of the region, it is estimated that a 30 percent decline in remittances would reduce the consumption of the bottom fifth of households by around 20 percent. While some countries have safety net programs that deliver a substantial proportion of benefits to poorer households, more resources are necessary to scale up these programs where they exist, and introduce targeted programs where they do not. Official financing for a number of years will be necessary to support desirable social spending until a durable recovery is in place.

The report recommends that with capital flows likely to be considerably lower than pre-crisis levels, and financial markets already differentiating across countries, policy makers need to address the most binding constraints to growth in order to improve their business environment and remain competitive.

“It is remarkable that business surveys show infrastructure and labor skills – formerly the main assets of transition countries – not only to be the tightest bottlenecks to the operation and growth of firms, but also more constraining than in non-transition economies at similar income levels. These sectors require urgent reforms,” said Mitra. “However, the surveys also show significant progress after two decades of transition in building institutions of the market economy. For example, tax administration and customs regulation which have traditionally ranked high among constraints to the operation and growth of firms are now seen as less constraining and indeed in line with non-transition economies at similar income levels.”

* The ECA countries include Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, FYR Macedonia, Georgia, Hungary, Kazakhstan, Kosovo, the Kyrgyz Republic, Latvia, Lithuania, Moldova, Montenegro, Poland, Romania, the Russian Federation, Serbia, the Slovak Republic, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine, and Uzbekistan.

Contacts:
In Washington:
Elena Karaban 202-473-9277
Ekaraban@worldbank.org
Michael Jones 202-473-2588
Mjones2@worldbank.org

Members of the World Bank’s Board of Executive Directors Visit Croatia

2009-10-30T12:36:16.000Z

Contact: Vanja Frajtić, 01/ 235 7297
E-mail: vfrajtic@worldbank.org
www.worldbank.hr

Zagreb, October 27, 2009 - A group of members of the World Bank’s Board of Executive Directors is visiting Croatia during October 27-30, 2009. This is the first time that such a group is visiting Croatia, as part of a three-country trip to the Europe and Central Asia Region, also including Latvia and the Kyrgyz Republic. The objective of the visit is to gain first-hand experience about Croatia’s economic and social challenges, see project activities financed by the World Bank and the International Finance Corporation, and hear the views of senior officials on the country’s economic priorities and plans, and their assessment of the collaboration with the World Bank Group. The group will also meet with representatives of the civil society.

The visiting Board members, including three Alternate Directors, come from the following countries but represent a much larger group of member countries: France, India, Italy, Kuwait, Netherlands (also representing Croatia), the Russian Federation, Thailand and the United States of America. Board Members are accompanied by Ms. Kristalina Georgieva, Vice President and Corporate Secretary of the World Bank Group.

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The Board of Executive Directors has 24 members, representing the 186 member countries of the World Bank Group. The Board defines the policies of the World Bank Group, endorses country partnership strategies and approves individual projects. Members of the Board have a dual responsibility, as they represent the interests and the concerns of their country or group of countries to the Board and the World Bank’s management, as well as the interests and concerns of the World Bank to the country or group of countries that appointed or elected them.

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For more information about the World Bank's work in Croatia, visit
www.worldbank.hr

Global Crisis Hits Home in Emerging Europe and Central Asia

2009-10-03T07:40:09.000Z

Contacts:

Kristyn Schrader (90) 530-929-45-35

kschrader@worldbank.org

Tunya Celasin (90) 533-285-18-21

tcelasin@worldbank.org

ISTANBUL, October 3, 2009—The global economic crisis has reversed the impressive economic growth of recent years in Emerging Europe and Central Asia, hitting families hard with higher unemployment and lost wages. Financially weaker governments will need to protect poor people while strengthening institutions and infrastructure to attract investors, the World Bank said today at a press briefing at the World Bank/IMF Annual Meetings.

“The global financial and economic crisis has literally hit home in many parts of Emerging Europe and Central Asia,” said Philippe Le Houérou, World Bank Vice-President for Europe and Central Asia. “What started as a financial crisis has become a social and human crisis. The global crisis has come on the heels of the food and fuel crises, which had already weakened people in the region by reducing their purchasing power. Today, rising poverty and joblessness are pushing households into poverty and making things even harder for those already poor.”

For the past decade, many countries of Emerging Europe and Central Asia notched up impressive growth, moving them closer to the living standards of Western Europe and other advanced economies. But the crisis has hit them hardest and stopped that convergence. Growth has plummeted from a fast clip of 7.6 percent in 2007 to 4.7 percent in 2008, and is projected at negative 5.6 percent in 2009.

“For years now, Emerging Europe and Central Asia has roared along in high gear,” said Le Houérou. “But the global crisis and the drying up of external private financial flows are stalling the engine of growth, prompting many to downshift and some to even slip into reverse. The job now for the governments in the region is to speed up reforms. The role of the international community is to help countries get back in gear. For us at the World Bank, that means essentially focusing our support to governments in their efforts to clean up the banking sector so that banks can provide a lifeline for firms and businesses to grow and create jobs, improve the business climate to attract private capital flows, make public spending more efficient so that the benefits reach working families, and continue to finance key public investments in infrastructure.”

Unemployment and deficits on the rise

The global crisis has hit some countries worse than others but today there is a danger that the region faces a weak and jobless recovery. Some countries, such as Poland, have fared better than others. Still, the number of jobless in the region has jumped from 8.3 million in 2008 to 11.4 million in 2009. It has doubled in the Baltic countries, grown by 60 percent in Turkey, and by one-third in other countries in the region.

“Instead of the number of poor falling by 15 million in 2009, we now project poverty to increase by about 15 million,” said Indermit Gill, World Bank Chief Economist for the Europe and Central Asia Region. “There are already 145 million poor people in the region – or almost one-third of the total population. For them, the crisis has made an already tough existence even tougher. Much of the world is getting good economic news this autumn. But for workers and their families in Emerging Europe and Central Asia the news is not encouraging. To them, the talk of recovery may seem premature.”

In the face of the unprecedented crisis, governments in Emerging Europe and Central Asia will have many hard choices to make, given that government deficits will increase from 1.5 percent of GDP in 2008 to 5.5 percent in 2009, said Gill. This will put more pressure on governments to make spending more efficient.

“Social spending makes up more than half of government expenditures so governments will need to make education, health care and social security more efficient,” Gill said. “School systems need to be resized to fit shrinking enrollment numbers due to falling fertility. Health care has to be restructured because many countries now have the health problems of high-income countries with the fiscal resources of middle-income economies. And social security has to be restructured to recognize that many countries in the region have aged before they have become wealthy. Reforms will help make governments fiscally healthy, economies robust, and societies more fair. Every responsible policymaker should take a hard look at these reforms.”

Also, governments must continue to improve their business environment to attract investment. During the last decade, countries in Emerging Europe and Central Asia have made progress in improving the climate for doing business. The region has been the top performer in the World Bank’s Doing Business ratings for the last six years—led first by countries in central and southern Europe and more recently by those in the Caucasus and Central Asia. This year, five of the top ten reformers were from the region: Krygyz Republic, FYR Macedonia, Belarus, Tajikistan, and Moldova.

World Bank supporting reforms through lending and advice

While governments are in the lead, the World Bank is helping countries navigate their way through the crisis, Le Houérou said. For its part, the World Bank is providing budget support to countries to support promising reform efforts. During the past year, the World Bank has increased financial support to the region by 60 percent, from $8 billion last year to $12.5 billion this year with the aim of mitigating the impact of the crisis on the poor, stabilizing banks, and positioning countries for post-crisis recovery. In September 2009 alone, the Bank approved $2 billion in budget support to Hungary, Latvia, and Ukraine.

Along with funding, the Bank is offering analytical support and encouraging governments to expand selected social safety net programs. Currently, most countries in the region have good programs that could be expanded during the crisis, such as those in the Kyrgyz Republic, Albania and Georgia where benefits are most likely to reach the neediest people. At the same time, the Bank is advising governments on how to fix less efficient programs to ensure benefits are reaching the right target audiences. Although many countries in the region have excelled on improving the business environment, many countries have not improved social service delivery.

The World Bank’s client countries in Emerging Europe and Central Asia are currently using Bank funds for 53 projects spanning institutional reform, infrastructure and interventions to help the neediest. Also, through the World Bank’s private sector arm, the International Finance Corporation (IFC), the Bank has teamed up with the EBRD and EIB on a $31 billion fund to support the banking sector and to fund lending to businesses hit by the global economic crisis through equity and debt finance, credit lines, and political risk insurance. And the Bank’s political risk insurance arm, MIGA, has made up to $3 billion available for investments in the heavily hit economies of the region. Guarantees worth nearly half of a $1 billion were issued in support of shareholder loans made by parent banks to their subsidiaries in Ukraine and Russia.

For more information, please visit www.worldbank.org/eca

The project Development Policy Loan 1 (DPL 1) is now in the pipeline.

2009-10-02T04:00:00.000Z

The project Development Policy Loan 1 (DPL 1) is now in the pipeline. To see more information, see the project information in the World Bank project database

Reaching Higher Growth Rates and Reducing Income Gap with EU Countries

2009-09-14T09:00:00.000Z

The World Bank
Contact: Vanja Frajtić
Phone: 01/ 2357 297
E-mail: vfrajtic@worldbank.org
www.worldbank.hr

World Bank: Croatia EU Convergence Report proposes recommendations

Zagreb, September 14, 2009 – Over the last 15 years, Croatia achieved impressive economic and social progress. Prior to the onset of the global crisis, the Croatian economy grew at a healthy 4-5% annually. The country maintained macroeconomic stability and favorable social development indicators. Croatia’s per capita income reached about 63% of the European Union average, and membership in the EU is well within reach.

Looking beyond the current global recession and beyond EU membership, what should Croatia be doing to speed up economic growth in a fiscally, socially and environmentally sustainable fashion and reach income levels similar to those of the more developed EU countries? What could be the future engines of high economic growth? What policies and actions could be considered by the Croatian authorities and other stakeholders to further improve the standard of living of Croatian citizens in the decades to come?

The World Bank’s Croatia EU Convergence Report: Reaching and Sustaining Higher Rates of Economic Growth, is trying to respond to those questions, looking at different segments of economic policy. It proposes recommendations on how to reach convergence with the EU countries in a fast yet sustainable and socially sensitive fashion.

The report discusses how Croatia could sustain and accelerate growth over the coming decades, by focusing on four economic policy strategies: (i) increasing the contribution of labor, by raising the rate of the population’s participation in the workforce and reducing unemployment; (ii) raising total factor productivity; (iii) deepening trade integration; and (iv) fostering innovation.

The report and its findings, which are summarized in the attached brief, are discussed today at a joint National Competitiveness Council and World Bank Conference held at Novinarski dom.

The report was prepared in close consultations with government authorities and other stakeholders. Three workshops with key stakeholders were held to discuss preliminary findings while the report is based on a survey of about 600 companies.

Summary of Key Recommendations of the Croatia EU Convergence Report

Increasing Employment: Labor Market Reforms and Education

Effective labor market reforms would likely have a positive impact on economic growth. Croatia’s employment rate (at about 58 percent of the working age population in 2008) is lower than the average for the EU-27 countries. This is the result of low labor participation rate and high unemployment. Thus, the contribution of labor to economic growth in recent years, although increasing somewhat over time, has been modest: less than one percentage point out of the almost five percent growth in the 2002-2007 period. If Croatia could raise employment rates closer to the EU’s Lisbon targets (including an overall employment rate of 70 percent), the country could increase its income level by an estimated 15.7 percent in 2025 (and 22.9 percent in 2040). This estimated boost in incomes corresponds to more than twice the expected effect for the average EU-27 country. What are the main obstacles to increasing the contribution of labor to economic growth in Croatia?
In order to increase the contribution of labor to economic growth, Croatia would need to raise labor participation and reduce unemployment. Recent reforms in the overall system of social security benefits in Croatia do not encourage participation in the labor market, particularly female participation. Raising labor participation requires the reduction of disincentives for the supply of labor which are embedded in the current social protection system. In addition, increased flexibility of firms to adjust their labor force to the business cycle, the better alignment of the cost of labor with labor productivity, and the alleviation of the current skills mismatch would likely result in lower unemployment rates. The following economic policy options might be considered:
- Aligning the incentives for labor supply by: (i) reviewing the incentives for early retirement implicit in current legislation and developing incentives to bring older workers back to work; (ii) reassessing the effects of unlimited duration unemployment benefits for older workers; (iii) integrating the currently inactive younger population, like war veterans and a large share of social welfare beneficiaries, back to the labor market; (iv) adopting a more forward-looking migration policy; and (v) assessing the effectiveness of current demographic policies.
- Increasing the demand for labor by: (i) enhancing labor market flexibility; and (ii) containing artificial increases in labor costs.
- Reducing skill mismatches by enhancing the responsiveness of vocational education and training (VET) and the tertiary education system to labor market needs with the provision of (i) better labor market information on occupational trends; (ii) transparent information on employment status of graduates from VET and higher education programs; (iii) functional integration of Croatian universities; and (iv) more flexible adjustments of enrollment quotas in education and training programs.
- Enhancing Croatia’s life-long learning (LLL) system by: (i) developing a LLL Strategy encompassing all forms of learning; (ii) increasing participation in adult education; (iii) involving employers (as well as students and graduates) in the governance of VET and higher education institutions.
The proposed strategy of increasing employment would probably generate the highest returns in terms of raising and sustaining economic growth of any of the policy areas discussed in the report. However, international experience suggests that labor reforms are also likely to be associated with the most complex political economy environment.

Raising Productivity: “Creative Destruction” and the Investment Climate
In Croatia today, many low and average productivity firms coexist with a smaller group of highly productive plants. This provides an opportunity for raising aggregate productivity. Higher (total factor) productivity could be achieved by (a) bringing the average efficiency of less productive firms closer to the higher productivity ones by improving critical aspects of the investment climate; and/or by (b) the reallocation of resources now poorly used in inefficient firms towards more efficient firms, through an enhanced process of so-called “creative destruction” (faster firm entry and exit). The report estimates that if Croatia could achieve a total factor productivity growth rate of 2.4 percent per year until 2020, roughly a one percentage point increase from the recent rate, the country’s per capita income could be about 9 percent higher than it would have been otherwise. A 2.4-percent TFP growth rate, albeit ambitious, is similar to what was achieved by Ireland in the 1990s.
Policies to raise aggregate productivity in Croatia could address both (a) factors hindering market dynamism, and (b) investment climate factors reducing technical efficiency. The contribution of allocative efficiency (the relative share of the more productive firms in total output) to aggregate productivity in Croatia is lower than in other countries that have emerged from import substitution regimes (e.g. Brazil and India), suggesting that major gains could still be obtained by improving allocative efficiency. The report identifies 15 out of more than 120 possible variables related to the investment climate in Croatia that significantly affect average firm productivity. These factors include: (i) the time required for a firm to obtain an import license; (ii) the skills of labor force; (iii) the extent to which workers in the production process use computers, and (iv) web-use. Together, factors like these offer a set of priorities for policies aiming at improving the technical efficiency of Croatian enterprises. The following economic policies might be considered:
- In order to foster enterprise restructuring and market dynamism, Croatia might (i) re-ignite the privatization process and improve corporate governance in remaining state owned enterprises; (ii) reduce state aid for declining sectors and streamline the bankruptcy process to improve exit conditions; (iii) improve product market regulation (with the full implementation of regulatory impact assessment requirements and elimination of unnecessary barriers to firm entry); (iv) liberalize entry into the service sector (particularly retail and infrastructure); and (v) complete market reforms in the agriculture sector.
- In order to improve the investment climate and foster average productivity gains, Croatia might (i) reduce the time required to obtain a license for international trade (especially imports); (ii) enable access to information and communication technology (ICT) capital by small and medium size enterprises (SMEs) and (iii) increase labor skills (in the short-term by a focus on improving VET and LLL, but also reviewing the obstacles for the provision of training by firms). Streamlining custom clearance is also needed. Croatia could use OECD’s experience with policies to facilitate technology adoption (particularly ICT) by SMEs to further enable computer-use by the enterprise sector.
- Further analysis is required of the reasons why the provision of transportation services by the private sector appears (based on enterprise surveys) to be a significant constraint, apparently especially for enterprises with lower market shares and those focused in the domestic and local markets – thus forcing the relatively less efficient use of their “own transportation services”.
- Preliminary evidence on an apparent positive association between access to non-banking finance and total factor productivity at firm level suggests further examination of the role of non-banking financial institutions in the selection of best investment opportunities and thus in fostering growth in Croatia.
While major gains could be obtained, strengthening the process of “creative destruction” inevitably creates winners and losers, with a risk for the political feasibility of reforms. Sector and regional differences may accentuate the risk of economic policy reversals, and thought will need to be given to appropriate mechanisms to deal with these risks.

Deepening Trade Integration: Foreign Direct Investment and the Supply of Exportable goods
Experiences of growth acceleration suggest that deepening of Croatia’s trade integration could be further explored as an additional source of faster growth and convergence. When measured in real (price-adjusted) terms, Croatia’s trade integration (the share of the value of total exports and imports in total GDP) is around 50 percent, much lower than in many comparable countries in the region. Several studies confirm that the country is exporting below its estimated potential. Croatia’s export growth rate, while increasing significantly in recent years (to 17 percent on average in 2002-08), has been consistently below that of the economies of Central and Eastern Europe.
In order to deepen its trade integration, Croatia would need to expand the supply of exportable goods and attract more Foreign Direct Investment (FDI). Obstacles to higher exports are mainly of a microeconomic nature: incomplete corporate restructuring has limited productivity gains in traditional export sectors, as well as diversification towards new products and new markets. In particular, Croatia’s current degree of specialization in tourism exposes it to a highly volatile sector. In addition, econometric analysis indicates that various cross-cutting issues affect the propensity of local firms to export, including such factors as: firm productivity, days to clear customs to export, and the availability of a firm’s own transportation. The analysis also confirmed that foreign-owned firms are more likely to export. Attracting export-oriented FDI may therefore be a feasible strategy for further diversification of the country’s exports. The suggested economic policy measures are as follows:
- In order to attract export-oriented FDI, Croatia might (i) facilitate access to land, (ii) address the problem of frequent electricity outages, (iii) improve trade regulations, and (iv) further streamline regulations affecting foreign investment. Surveyed firms also consider the inadequacy of labor supply, tax rates and tax administration to be among the top 10 obstacles for the expansion of foreign-owned companies in Croatia. In this context, a broader effort to strengthen FDI promotion activities is recommended.
- In order to develop the supply of exportable goods, Croatia might (i) improve trade-related services, (ii) raise standards of quality certification, and (iii) reduce logistics costs. An overall strategy to increase the level of information about foreign markets would be beneficial. Croatia’s Metrology, Standards, Testing and Quality (MSTQ) infrastructure needs to be more fully integrated to global norms. As Croatia has an extensive network of transport infrastructure, and public investments in roads have already risen significantly in recent years, the achievement of further efficiency gains in the transport sector will likely require the continuation of railways restructuring and the mobilization of additional private financing for infrastructure projects.
Leveraging the benefits of the global economy is important, even though a decline in trade volumes in the context of the current global crisis may limit the benefits from such a strategy in the near-term. Standard trade policies, complemented by measures to foster enterprise restructuring and market dynamism, would encourage exporting firms to raise their productivity (i.e. shipbuilding), and enable new, more productive firms to enter the market. Synergies between trade and innovation policies could also be explored, as innovation policies may help export diversification, further trade integration may help technology absorption, and FDI promotion policies could also target R&D-intensive FDI.

Fostering Innovation: Knowledge Commercialization and Use
Croatia could further expand and sustain growth by transforming existing knowledge into productivity gains and innovation. The country has a long tradition of scientific activity, but knowledge commercialization is still in early stages, as indicated for example by the fact that only 6 percent of Croatian firms applied for a patent in the 2005-07 period. Interestingly, this result contrasts with a fairly high level of technology adoption, as suggested by the large share (44 percent) of workers using computers in the production process. In addition to the low level of patenting, total R&D expenditures are also relatively modest, at approximately 1 percent of GDP. This report estimates that, by judiciously increasing the R&D to GDP ratio to 3 percent (the target set by the EU’s Lisbon Agenda), Croatia could increase its income by around 6 percent in 2025 (and 8.2 percent by 2040).
In order to foster the innovation and technological progress, Croatia’s innovation policy should encourage the commercialization of knowledge. Enabling the private sector to transform knowledge into productivity gains and innovation requires (i) focusing public support to R&D on mobilizing private R&D, (ii) further adjusting the incentive regime for research commercialization, with a view to reducing the current bias against applied research and development, and (iii) encouraging science-based start-ups. Of particular relevance is the supply of researchers and professionals with higher education. At 5.6 percent, the share of science and technology graduates in the population in Croatia is lower than in most countries in the region and the EU average of 13 percent. The main recommendations of the report in the area of innovation policy are the following:
- Increasing private R&D by: (i) benchmarking existing tax-incentives against those in leading innovative economies and assessing their impact on the promotion of private R&D, (ii) assessing to what extent public R&D activity (given the limited supply of human resources) may be “crowding-out” private R&D, and (iii) considering the option of attracting R&D-intensive FDI in consultation with the FDI promotion agency.
- Improving conditions for collaboration between university and industry by: (i) reviewing criteria for progress in the academic career, (ii) simplifying legal requirements for cooperation, (iii) reassessing the overall incentives embedded in the legal regime, (iv) reviewing the benefits provided by BICRO’s SPREAD program, and considering the adoption of a matching-grant scheme, and (v) promoting the development of technology/innovation “brokers” that would help the development of joint-projects to be supported by current programs.
- Enabling the start-up of science based companies by: (i) supporting the development of technology transfer offices, (ii) reviewing the regulatory bottlenecks for the development of a venture capital industry in the country, (iii) encouraging market-oriented activities of public research institutes and technology parks, and (iv) promoting the restructuring of public R&D institutes by adopting a system of declining earmarked funding, and introducing researcher-level incentives for diversification of revenues.
- Improving the overall governance structure of Croatia’s National Innovation System (NIS) by establishing a strategy for gradual implementation of a monitoring and evaluation system, consolidating and institutionalizing some of the programs (such as those for the support of the Diaspora), and clarifying the roles of BICRO and the Croatian Institute of Technology.
In seeking to foster innovation and technological progress in Croatia, two caveats should be kept in mind. First, because the main challenge is the commercialization of knowledge and not knowledge generation, standard science and technology (S&T) policy measures should be complemented by selected investment climate reforms that encourage the private sector to demand knowledge. Second, as innovation will be incremental in nature and not necessarily consist of radical breakthroughs, it would be advisable that S&T policies do not discriminate against, and if possible support, the less-high technology sectors, including textile, footwear and agriculture, which also need to improve their technological level.

Ostvarivanje viših stopa rasta i smanjenje dohodovnog jaza u odnosu na zemlje EU

2009-09-14T09:00:00.000Z

Svjetska banka
Kontakt osoba: Vanja Frajtić
Tel: 01/ 2357 297
E-mail: vfrajtic@worldbank.org
www.worldbank.hr

Svjetska banka: Izvješće o konvergenciji Hrvatske s EU predlaže preporuke

Zagreb, 14. rujna 2009. – U posljednjih je 15 godina Republika Hrvatska ostvarila dojmljiv gospodarski i socijalni napredak. Prije početka svjetske krize, hrvatsko je gospodarstvo raslo po povoljnoj godišnjoj stopi od četiri do pet posto. Hrvatska je održala makroekonomsku stabilnost i povoljne pokazatelje socijalnog razvitka. Dohodak po glavi stanovnika u Republici Hrvatskoj dosegao je razinu od oko 63 posto prosjeka Europske unije, a članstvo u EU nadohvat je ruke.

Nakon trenutne svjetske recesije i nakon ostvarivanja članstva u EU, što bi Republika Hrvatska trebala poduzeti kako bi ubrzala gospodarski rast na fiskalno, socijalno i ekološki održiv način i ostvarila razine dohotka slične onima u razvijenijim zemljama EU? Što bi moglo predstavljati buduće pokretače visokog gospodarskog rasta? Koje bi politike i korake mogle razmotriti hrvatske vlasti i druge uključene skupine u svrhu daljnjeg poboljšanja životnog standarda hrvatskih građana u predstojećim desetljećima?

Izvješće Svjetske banke s naslovom Izvješće o konvergenciji Hrvatske s EU: Ostvarivanje i održavanje viših stopa gospodarskog rasta nastoji odgovoriti na ova pitanja, sagledavajući različite segmente gospodarske politike. U izvješću se predlažu preporuke o načinu ostvarivanja konvergencije sa zemljama EU na brz, ali ujedno održiv i socijalno osjetljiv način.

U izvješću se govori o tome kako bi Republika Hrvatska mogla održati i ubrzati gospodarski rast u predstojećim desetljećima, usredotočujući se na četiri strategije gospodarske politike: (i) povećanje doprinosa radne snage povećanjem stope sudjelovanja stanovništva u radnoj snazi i smanjenjem nezaposlenosti; (ii) povećanje ukupne faktorske produktivnosti; (iii) produbljivanje trgovinske integracije; i (iv) poticanje inovacija.

O izvješću i nalazima, koji su sažeti u prilogu, raspravlja se danas na zajedničkom predstavljanju Nacionalnog vijeća za konkurentnost i Svjetske banke koje se održava u Novinarskom domu.

Izvješće je izrađeno na temelju bliskih konzultacija s nadležnim državnim tijelima i drugim uključenim skupinama. S ključnim zainteresiranima stranama održane su tri radionice tijekom kojih se raspravljalo o preliminarnim nalazima, a samo se izvješće temelji na ispitivanju provedenom među oko 600 trgovačkih društava.

Sažetak ključnih preporuka iz Izvješća o konvergenciji Hrvatske s EU

Povećanje zaposlenosti: Reforme tržišta rada i obrazovanje

Djelotvorne reforme tržišta rada vjerojatno bi imale pozitivan učinak na gospodarski rast. Stopa zaposlenosti u Hrvatskoj (koja je na razini od oko 58 posto radno aktivnog stanovništva 2008. godine) manja je od prosjeka zemalja iz skupine EU 27. To je rezultat niske stope sudjelovanja stanovništva u radnoj snazi i visoke stope nezaposlenosti. Zbog toga je doprinos radne snage gospodarskom rastu proteklih godina bio skroman, premda se s vremenom ponešto povećavao: manje od jednog postotnog boda od gotovo pet posto rasta u razdoblju 2002.-2007. godine. Ako bi mogla približiti stope zaposlenosti lisabonskim ciljevima EU (uključujući ukupnu stopu zaposlenosti od 70 posto), Hrvatska bi prema procjenama mogla povećati svoju razinu dohotka do 2025. godine za 15,7 posto (odnosno 22,9 posto do 2040. godine). Ovaj procijenjeni poticaj povećanja dohotka iznosi više nego dvostruko od očekivanog učinka za prosjek 27 zemalja EU-a. Koje su glavne prepreke povećanju sudjelovanja radne snage u gospodarskom rastu u Hrvatskoj?
Kako bi povećala doprinos radne snage gospodarskom rastu, Hrvatska bi trebala povećati sudjelovanje radne snage i smanjiti nezaposlenost. Nedavne reforme općeg sustava socijalnih naknada u Hrvatskoj ne djeluju poticajno na sudjelovanje na tržištu rada, posebice kod žena. Povećanje sudjelovanja radne snage zahtijeva smanjenje čimbenika iz postojećeg sustava socijalne zaštite koji djeluju destimulativno na ponudu radne snage. Nadalje, veća fleksibilnost trgovačkih društava u smislu prilagođavanja svoje radne snage poslovnom ciklusu, bolje usklađivanje troškova rada u odnosu na produktivnost radne snage i otklanjanje postojećih neusklađenosti kvalifikacija vjerojatno bi dovelo do nižih stopa nezaposlenosti. U tom smislu, mogu se razmotriti sljedeće opcije gospodarske politike:
1. Uskladiti poticaje za ponudu radne snage na način da se: (i) revidiraju poticaji za rani odlazak u mirovinu koji implicitno postoje u važećem zakonodavstvu i razviju poticaji za privlačenje starijih osoba da se vrate na posao; (ii) ponovno ocijene učinci neograničenog trajanja isplate naknada za nezaposlene za starije radnike; (iii) na tržištu rada integrira trenutno neaktivna mlađa populacija poput branitelja i velik dio korisnika socijalne pomoći; (iv) usvoji migracijska politika koja je više orijentirana prema budućnosti; i (v) ocijeni djelotvornost postojećih demografskih politika.
2. Povećati potražnju za radnom snagom kroz: (i) jačanje fleksibilnosti tržišta rada; i (ii) ograničavanje umjetnih povećanja troškova rada.
3. Smanjiti neusklađenost kvalifikacija kroz jačanje prijemljivosti strukovnog obrazovanja i osposobljavanja te tercijarnog obrazovnog sustava prema potrebama tržišta rada na način da se osiguraju (i) bolje informacije s tržišta rada o strukovnim trendovima; (ii) transparentne informacije o statusu zapošljavanju osoba koje završe strukovno obrazovanje i programe visokog obrazovanja; (iii) funkcionalna integracija hrvatskih sveučilišta; i (iv) fleksibilnija prilagodba upisnih kvota u programima obrazovanja i osposobljavanja.
4. Jačanje hrvatskog sustava cjeloživotnog učenja kroz: (i) razvoj Strategije cjeloživotnog učenja koja bi obuhvaćala sve oblike učenja; (ii) povećanje sudjelovanja u obrazovanju odraslih; (iii) uključivanje poslodavaca (kao i studenata i diplomanata) u upravljanje institucijama strukovnog i visokog obrazovanja.
Predložena strategija povećanja zaposlenosti vjerojatno bi generirala najveći povrat u smislu povećanja i održavanja gospodarskog rasta svih područja politika o kojima je riječ u ovome izvješću. Međutim, međunarodna iskustva također pokazuju da su reforme tržišta rada vjerojatno povezane s najsloženijim okruženjem političke ekonomije.

Povećanje produktivnosti: “Kreativna destrukcija” i ulagačka klima
Danas u Hrvatskoj mnoga poduzeća niske i prosječne produktivnosti koegzistiraju s manjom skupinom visoko produktivnih poduzeća. To pruža mogućnost povećanja ukupne produktivnosti. Veća (ukupna faktorska) produktivnost mogla bi se postići na način da se (a) prosječna učinkovitost manje produktivnih poduzeća približi onima s većom produktivnosti na način da se poboljšaju ključni aspekti ulagačke klime; i/ili (b) kroz preraspodjelu resursa koji se sada slabo koriste u neučinkovitim poduzećima prema učinkovitijima kroz pojačani proces takozvane „kreativne destrukcije“ (brži ulazak i izlazak poduzeća s tržišta). U izvješću se procjenjuje da, ako bi Republika Hrvatska mogla ostvariti stopu rasta ukupne faktorske produktivnosti od 2,4 posto godišnje do 2020. godine, što je povećanje od oko jednog postotnog boda u odnosu na nedavno ostvarenu stopu, dohodak po stanovniku u Hrvatskoj bio bi oko 9 posto viši nego što bi to inače bio slučaj. Stopa rasta ukupne faktorske produktivnosti (TFP) od 2,4 posto, iako ambiciozna, slična je onoj koju je ostvarila Irska u 1990-ima.
Politike povećanja ukupne produktivnosti u Hrvatskoj mogle bi biti usmjerene i na (a) čimbenike koji ometaju tržišnu dinamiku kao i na (b) čimbenike ulagačke klime koji smanjuju tehničku učinkovitost. Doprinos alokativne učinkovitosti (relativnog udjela produktivnijih poduzeća u ukupnim rezultatima) ukupnoj produktivnosti u Hrvatskoj manji od onog koji imaju zemlje koje su se podigle temeljem režima supstitucije uvoza (npr. Brazil i Indija), što govori o tome da se veliki dobici još uvijek mogu ostvariti poboljšanjem alokativne učinkovitosti. U izvješću se utvrđuje 15 od više od 120 mogućih varijabla vezanih uz ulagačku klimu u Hrvatskoj, koje značajno utječu na prosječnu produktivnost poduzeća. Ti čimbenici uključuju: (i) vrijeme potrebno poduzeću za dobivanje dozvole za uvoz; (ii) vještine radne snage; (iii) omjer u kojem radnici u procesu proizvodnje koriste računala i (iv) korištenje Interneta. Ovakvi faktori zajednički nude niz prioriteta za politike usmjerene prema poboljšanju tehničke učinkovitosti hrvatskih poduzeća. U tom smislu, mogu se razmotriti sljedeće gospodarske politike:
1. U svrhu promicanja restrukturiranja poduzeća i dinamike tržišta, Hrvatska bi mogla (i) ponovno aktivirati proces privatizacije te poboljšati korporativno upravljanje u preostalim poduzećima u državnom vlasništvu; (ii) smanjiti državne pomoći za sektore koji bilježe nazadak te racionalizirati stečajni postupak kako bi poboljšala uvjete za izlazak poduzeća s tržišta; (iii) poboljšati regulaciju tržišta proizvoda (uz punu provedbu zahtjeva za ocjenom učinka propisa i eliminiranje nepotrebnih prepreka trgovačkim društvima za ulazak na tržište); (iv) liberalizirati ulazak u uslužni sektor (posebice maloprodaju i infrastrukturu); i (v) dovršiti tržišne reforme u sektoru poljoprivrede.
2. Kako bi se poboljšala ulagačka klima i promicala povećanja prosječne produktivnosti, Hrvatska bi mogla (i) smanjiti vrijeme potrebno za dobivanje dozvola za međunarodnu trgovinsku razmjenu (posebice uvoz); (ii) omogućiti pristup malih i srednjih poduzeća kapitalu za informacijsku i komunikacijsku tehnologiju i (iii) povećati kvalificiranost radne snage (kroz kratkoročno usmjeravanje na poboljšanje strukovnog obrazovanja i cjeloživotnog učenja, ali i na način da se revidiraju prepreke organizaciji izobrazbe u okviru poduzeća). Racionalizacija carinskog postupka također je potrebna. Hrvatska bi mogla iskoristiti iskustvo OECD-a s politikama kojima se olakšava usvajanje tehnologije (posebice informacijske i komunikacijske tehnologije) u malim i srednjim poduzećima kako bi se dodatno omogućila uporaba računalne tehnologije u poduzetničkom sektoru.
3. Potrebna je daljnja analiza razloga zbog kojih se čini kako pružanje usluga prijevoza u privatnom sektoru (prema anketama među poduzećima) predstavlja značajno ograničenje, što je izgleda posebno slučaj s poduzećima koja imaju manji tržišni udio i poduzećima usmjerenima prema domaćim i lokalnim tržištima – čime ih se prisiljava na relativno manje učinkovito korištenje „vlastitih usluga prijevoza“.
4. Preliminarni dokazi o naizgled pozitivnoj vezi između pristupa ne-bankarskom financiranju i ukupne faktorske produktivnosti poduzeća sugeriraju daljnje ispitivanje uloge nebankarskih financijskih institucija pri odabiru najboljih mogućnosti ulaganja te jačanju rasta u Hrvatskoj.
Premda je moguće ostvariti velike dobitke, jačanje procesa „kreativne destrukcije“ nužno stvara dobitnike i gubitnike, što predstavlja rizik političke izvedivosti reforma. Sektorske i regionalne razlike mogu naglasiti rizik zaokreta gospodarske politike, pa će trebati razmisliti o odgovarajućim mehanizmima rješavanja tih rizika.

Produbljivanje trgovinske integracije: Izravna strana ulaganja i ponuda izvozne robe
Iskustva s ubrzanjem rasta sugeriraju da bi se produbljivanje trgovinske integracije Hrvatske moglo pobliže istražiti kao dodatni izvor bržeg rasta i konvergencije. Mjereno u realnim (cjenovno usklađenim) okvirima, trgovinska integracija Hrvatske (udio vrijednosti ukupnog izvoza i uvoza u ukupnom BDP-u) iznosi oko 50 posto, što je mnogo niže u odnosu na mnoge usporedne zemlje u regiji. Nekoliko studija potvrđuju da Hrvatska izvozi manje od svog procijenjenog potencijala. Stopa rasta hrvatskog izvoza, iako se proteklih godina značajno povećala (na prosječno 17 posto u razdoblju 2002.-2008.), bila je dosljedno niža nego u gospodarstvima Središnje i Istočne Europe.
Kako bi produbila trgovinsku integraciju, Hrvatska bi trebala proširiti ponudu izvozne robe i privući više izravnih stranih ulaganja. Prepreke većem izvozu uglavnom su mikroekonomske prirode: nepotpuno korporativno restrukturiranje ograničilo je povećanja produktivnosti u tradicionalnim izvoznim sektorima, ali i diversifikaciju prema novim proizvodima i tržištima. Posebice, trenutna razina specijaliziranosti Hrvatske u području turizma izlaže je vrlo nepostojanom sektoru. Uz to, ekonometrijska analiza pokazuje da različita sveobuhvatna pitanja utječu na sklonost lokalnih poduzeća prema izvozu, uključujući faktore kao što su: produktivnost poduzeća; broj dana potrebnih da se provede carinski postupak za izvoz i raspoloživost vlastitog prijevoza. Analiza je također potvrdila da je vjerojatnije kako će poduzeća u stranom vlasništvu ujedno izvoziti. Privlačenje izvozno orijentiranih izravnih stranih ulaganja stoga može biti izvediva strategija daljnje diversifikacije hrvatskog izvoza. Predložene mjere gospodarske politike su sljedeće:
1. Kako bi privukla izvozno orijentirana izravna strana ulaganja, Hrvatska bi mogla (i) olakšati pristup zemljištu; (ii) riješiti problem učestalih prekida napajanja električnom energijom; (iii) poboljšati trgovinsku regulativu i (iv) dodatno racionalizirati regulativu u području stranih ulaganja. Anketirana poduzeća također smatraju da se neadekvatnost u ponudi radne snage, porezne stope i administracija poreznog sustava ubrajaju među 10 najvažnijih prepreka za širenje poslovanja poduzeća u stranom vlasništvu u Hrvatskoj. U tom kontekstu preporučuju se opsežniji napori s obzirom na jačanje aktivnosti promidžbe izravnih stranih ulaganja.
2. Kako bi razvila ponudu izvozne robe, Hrvatska bi mogla (i) poboljšati usluge vezane uz trgovinu; (ii) podići standarde za certificiranje kvalitete i (iii) smanjiti logističke troškove. Bilo bi korisno izraditi opću strategiju povećanja razine informacija o stranim tržištima. Infrastruktura mjeriteljstva, normizacije, testiranja i kvalitete (MSTQ) u Hrvatskoj treba biti u potpunosti integrirana sa svjetskim normama. Budući da Hrvatska ima široku mrežu prometne infrastrukture, a javna ulaganja u ceste već su se značajno povećala proteklih godina, daljnje povećanje učinkovitosti u sektoru prometa vjerojatno će tražiti nastavak restrukturiranja željeznica i mobilizaciju dodatnog privatnog financiranja za infrastrukturne projekte.
Iskorištavanje prednosti globalnog gospodarstva je važno, iako smanjenje opsega trgovinske razmjene u kontekstu svjetske krize može ograničiti prednosti takve strategije promatrano u kratkoročnom razdoblju. Standardne trgovinske politike, nadopunjene mjerama promicanja restrukturiranja poduzeća i tržišne dinamike, potaknule bi izvozna poduzeća na povećanje produktivnosti (npr. brodogradnja) te omogućile ulazak novih, produktivnijih poduzeća na tržište. Mogu se razmotriti i sinergije između trgovinskih i inovacijskih politika, budući da inovacijske politike mogu pomoći u diversifikaciji izvoza, daljnja trgovinska integracija može pomoći pri apsorpciji tehnologije, a politike promicanja izravnih stranih ulaganja također bi se mogle usmjeriti na izravna strana ulaganja s intenzivnom komponentom istraživanja i razvoja.

Promicanje inovacija: Komercijalizacija i primjena znanja
Hrvatska bi mogla dalje širiti i održavati rast kroz transformaciju postojećeg znanja u porast produktivnosti i inovacije. Hrvatska ima dugu tradiciju znanstvenih aktivnosti, ali komercijalizacija znanja je još uvijek u ranim fazama, kao što primjerice pokazuje činjenica da je tek 6 posto hrvatskih poduzeća prijavilo patente u razdoblju 2005.-2007. Zanimljivo je da je ovaj rezultat u kontrastu s prilično visokom razinom usvajanja tehnologija, kao što pokazuje velik udio radnika koji u proizvodnom procesu koriste računala (44 posto). Uz nisku razinu aktivnosti vezanih uz patentiranje, ukupni izdaci za istraživanje i razvoj su također relativno skromni i iznose oko 1,0 posto BDP-a. U ovom se izvješću procjenjuje da bi povećanjem omjera istraživanja i razvoja prema BDP-u na 3 posto (cilj zadan u Lisabonskoj strategiji EU) Hrvatska mogla povećati svoj dohodak za oko 6 posto do 2025. godine (i 8,2 posto do 2040.).
S ciljem promicanja inovacija i tehnološkog napretka, hrvatska politika inovacija trebala bi poticati komercijalizaciju znanja. Kako bi se privatnom sektoru omogućila preobrazba znanja u povećanje produktivnosti i inovacije potrebno je (i) usmjeriti javnu potporu istraživanju i razvoju prema mobiliziranju privatnog istraživanja i razvoja; (ii) dodatno prilagoditi režim poticaja za komercijalizaciju istraživanja, s ciljem smanjivanja trenutnih predrasuda u odnosu na primijenjeno istraživanje i razvoj i (iii) poticati osnivanje poduzeća koja se temelje na znanosti. Od posebnog je značaja ponuda istraživača i stručnjaka s visokim obrazovanjem. Hrvatski udio osoba koje diplomiraju na području znanosti i tehnologije u odnosu na stanovništvo koji iznosi 5,6 posto niži je nego u većini zemalja u regiji i od prosjeka EU koji iznosi 13 posto. Glavne preporuke izvješća za područje inovacijske politike su sljedeće:
- Povećati privatna istraživanja i razvoj: (i) uspoređivanjem postojećih poreznih poticaja s vodećim inovativnim gospodarstvima i ocjenjivanjem njihova učinka na promicanje privatnog istraživanja i razvoja, (ii) ocjenjivanjem omjera u kojem javne aktivnosti istraživanja i razvoja (s obzirom na ograničenu ponudu ljudskih resursa) moguće „istiskuju“ privatno istraživanje i razvoj; i (iii) razmatranjem opcija za privlačenje izravnih stranih ulaganja s intenzivnom komponentom istraživanja i razvoja uz konzultacije s agencijom za promicanje izravnih stranih ulaganja.
- Unaprijediti uvjete za suradnju između sveučilišta i industrije kroz: (i) revidiranje kriterija za napredovanje u akademskoj karijeri; (ii) pojednostavljenje zakonskih uvjeta za suradnju; (iii) ponovno ocjenjivanje općih poticaja sadržanih u pravnom okviru, (iv) revidiranje naknada koje osigurava BICRO-ov SPREAD program i moguće razmotriti usvajanje odgovarajućeg sustava darovnica; i (v) promicanje razvoja tehnoloških/inovacijskih „brokera“ koji bi pomogli u razvoju zajedničkih projekata koji bi bili podržani kroz postojeće programe.
- Omogućiti osnivanje poduzeća temeljenih na znanosti kroz: (i) podršku razvoju ureda za prijenos tehnologije; (ii) revidiranje regulatornih uskih grla za razvoj industrije rizičnog kapitala u Hrvatskoj; (iii) poticanje tržišno orijentiranih aktivnosti javnih istraživačkih instituta i tehnoloških parkova; i (iv) promicanje restrukturiranja javnih instituta za istraživanje i razvoj kroz usvajanje sustava opadajućeg namjenskog financiranja te uvođenje poticaja na razini istraživača radi diversifikacije prihoda.
- Poboljšati opću strukturu upravljanja hrvatskim Nacionalnim inovacijskim sustavom (NIS) kroz uspostavu strategije za postupnu provedbu sustava praćenja i ocjenjivanja, konsolidiranje i institucionalizaciju nekih programa (kao što su programi podrške dijaspori) i pojašnjenje uloge BICRO-a i Hrvatskog instituta za tehnologiju.
Kod poticanja inovacija i tehnološkog napretka u Hrvatskoj trebalo bi zadržati na umu dva upozorenja. Kao prvo, budući da glavni izazov predstavlja komercijalizacija znanja, a ne generiranje znanja, standardne mjere politike promicanja znanosti i tehnologije treba nadopuniti odabranim reformama ulagačke klime kojima bi se privatni sektor potaknuo na traženje znanja. Kao drugo, budući da će inovacije po svojoj prirodi biti postupne, a ne nužno predstavljati radikalne prekretnice, savjetuje se da politike poticanja znanosti i tehnologije ne diskriminiraju, već da po mogućnosti i podrže sektore koji nisu u tolikoj mjeri obilježeni visokom tehnologijom, uključujući sektor tekstila, obuće i poljoprivrede, koji također trebaju povećati svoju tehnološku razinu.

Doing Business 2010: Eastern Europe and Central Asia Region Leads the World in Business Regulatory Reform

2009-09-09T08:59:06.000Z

In Washington, D.C.:
Nadine Ghannam
Phone: +1 (202) 473-3011
E-mail: nsghannam@ifc.org

Washington, D.C., September 9, 2009—In a record year for regulatory reform worldwide, Eastern Europe and Central Asia led all regions in the pace of reforms. Doing Business 2010: Reforming through Difficult Times finds that 26 of 27 economies in the region reformed regulations to create more opportunity for domestic firms.

Globally, a record 131 of the 183 economies surveyed reformed business regulations between June 2008 and May 2009, according to the report, the seventh in a series of annual reports published by IFC and the World Bank.

The region was the most active worldwide in reforming insolvency regimes and easing access to credit. Six economies improved their insolvency regimes: Albania, Estonia, Lithuania, Poland, Russia, and Tajikistan. Seven reformed their credit information systems: Armenia, Azerbaijan, Latvia, the Former Yugoslav Republic of Macedonia, Serbia, Tajikistan, and Turkey. The Kyrgyz Republic and Poland strengthened the legal rights of borrowers and lenders.

“Governments in Europe and Central Asia continue implementing regulatory reforms as part of their long-term strategies, despite the many challenges of the past year,” said Neil Gregory, Advisor, Financial and Private Sector Development, World Bank Group. “They recognize that the quality of business regulation helps determine how easy it is to reorganize troubled firms, rebuild entrepreneurs’ confidence, and start new businesses,”

Reform activity among developing economies in the region is the strongest since 2004. The Kyrgyz Republic, the region’s leading reformer, moved up in the global rankings from 80 to 41 on ease of doing business, by implementing reforms in seven of the 10 areas measured by the report. Among other things, it expedited the issuance of construction permits and eased business start-up and property registration.

This year Rwanda was the top global reformer. There were 4 new reformers among the global top 10: Liberia, the United Arab Emirates, Tajikistan and Moldova. Others, aside from Rwanda, include Egypt, Belarus, the Former Yugoslav Republic of Macedonia, the Kyrgyz Republic, and Colombia.

“Reforms continue to move eastward across the region. Albania, Belarus, the Kyrgyz Republic, and FYR Macedonia implemented reforms in several areas for the third year in row,” said Svetlana Bagaudinova, an author of the report. “Inspired by their neighbors, Kazakhstan, Montenegro, and Tajikistan have also picked up the pace of reform,” she added.

Doing Business analyzes regulations that apply to an economy’s businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and closing a business. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems.

Reforms in Croatia

“This year Croatia continued with positive reforms as marked in this year’s Doing Business report. Croatia was among the top ten reformers in the dealing with construction permits area measured by the report. The process for getting construction permits was simplified by opening a one-stop shop and through enforcement of the building code, both improving the efficiency of the permitting process by streamlining procedures and cutting approval times. In addition, to help start businesses quicker Croatia is encouraging people to use e-services by having set a 24-hour deadline for responding to online applications, compared with 14 days for paper-based applications. Today some 77% of Croatians have a credit history while five years ago none did. Also in 2008-09, close to 20% of borrowers were using movable collateral, as compared to around 3% in 2005. A huge improvement was made in the speed of registering property. It took 104 days in 2008-09 to register a business property compared to over two and a half years in 2004.” said Andras Horvai, World Bank Country Manager for Croatia.

“Today, in these challenging times, when capital is scarce and companies, local and foreign alike are facing difficulties, it is more important than ever to continue with reforms which can improve the business environment, minimizing regulatory and administrative barriers, attracting new investments in the country and creating more jobs.” continued Horvai.

About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.

For more information about the Doing Business report series, please visit: www.doingbusiness.org

For more information on Doing Business 2010, please contact:

Nadine Ghannam +1 (202) 473-3011
E-mail: nsghannam@ifc.org

Rebecca Ong +1 (202) 458-0434
E-mail: rong@worldbank.org

Contacts for region-specific queries on Doing Business 2010:

Central and Eastern Europe Ilya Sverdlov +7 (495) 411-7555 E-mail: isverdlov@ifc.org	Central Asia Nezhdana Bukova +7 (985) 411-3986 E-mail: nbukova@ifc.org
Southern Europe Slobodan Brkic +381 (11) 30-23-750 E-mail: sbrkic@ifc.org	Kristyn Schrader +1 (202) 458-2736 E-mail: kschrader@worldbank.org

The project Export Finance Intermediation Loan has changed to Active

2009-08-05T04:00:00.000Z

The project Export Finance Intermediation Loan has changed to Active. To see more information, see the project information in the World Bank project database

The objective of the Export Finance Intermediation Loan Project for Croatia is to support the preservation and growth of exports by providing medium- and long-term working capital and investment finance to exporters and foreign exchange earning enterprises. The Croatia Export Finance Intermediation Loan (CEFIL) is a single component project consisting of a credit line to Croatian Bank for Reconstruction and Development (HBOR) as the Borrower and implementing agency. HBOR will wholesale the funds to private banking institutions (Participating Financial Intermediaries or PFIs), which in turn will on-lend to eligible private exporters and quasi-exporters such as the tourism and logistics sector. The envisaged project is to be implemented through HBOR's credit division. Its responsibilities will include: (i) on-lending to PFIs for final lending to sub-borrowers; (ii) ensure effective functioning of the on-lending facility to final borrowers through PFIs; (iii) on-going monitoring of the PFIs to ensure compliance with project criteria; (iv) responsibility for adherence to all fiduciary and safeguard requirements of the World Bank for final sub-borrowers; and (v) monitoring and evaluation based on key project development indicators.

World Bank to Support Competitiveness of Croatia’s Economy

2009-08-04T21:07:22.000Z

Contacts:
In Croatia: Vanja Frajtic +385 1 2357 297
vfrajtic@worldbank.org
In Washington: Kristyn Schrader +1-202-458-2736
Kschrader@worldbank.org

WASHINGTON, August 4, 2009―The World Bank today approved a EUR100 million (USD$141.2 million equivalent) loan to the Croatian Bank for Reconstruction and Development to expand the private sector’s access to credit and boost competitiveness, particularly among exporters.

The Croatia Export Finance Intermediation Loan (CEFIL) Project will support the Government of Croatia’s efforts to ensure steady flow of credit to strategic private businesses. The loan will support the Government’s goal of enhancing economic competitiveness by preserving exports and employment, and fostering sustainable growth and recovery during this period of global economic downturn. More specifically, the project will support export growth by providing working capital and investment finance to exporters, and foreign exchange-earning enterprises such as in tourism and logistics sector.

The project will be implemented by the Croatian Bank of Reconstruction and Development which will make the project funds available to commercial banks, which in turn will on-lend to eligible private companies.

”The global economic recession has affected all of the economies in the region, including Croatia’s. Limited liquidity in global markets has meant restricted access to medium- and long-term financing for many private enterprises which are an important engine for growth and job creation,” said Theodore Ahlers, World Bank Acting Country Director for Croatia. “Through this loan, we will help the Government of Croatia’s efforts to stabilize the economy by making additional financing available to exporters so they can continue to invest in their businesses and create employment opportunities.”

Since joining the World Bank in 1993, Croatia has received support from the global development institution in the form of financial and technical assistance, policy advice and analytical services. To date, the Bank has supported 41 operations with a total value of US$2.52 billion, and it has approved 52 grants with a total value of US$70 million.

For more information about the World Bank's work in Croatia, visit
www.worldbank.hr

Croatia Export Finane Intermediation Loan Project

2009-08-04T15:45:00.000Z

IBRD Loan: €100 million

Terms: Maturity = 28.5 years; Grace Period = 7 years

Project ID: P116080

Project Description: The Export Finance Intermediation Loan Project for Croatia aims to support the preservation and growth of exports by providing medium- and long-term working capital and investment finance to exporters and foreign exchange earning enterprises. The Croatia Export Finance Intermediation Loan (CEFIL) is a single component project consisting of a credit line to Croatian Bank for Reconstruction and Development (HBOR) as the Borrower and implementing agency. HBOR will wholesale the funds to private banking institutions (Participating Financial Intermediaries or PFIs), which in turn will on-lend to eligible private exporters and quasi-exporters such as the tourism and logistics sector. The envisaged project is to be implemented through HBOR's credit division.

Media Contact

Kristyn Schrader

(202) 458-2736

kschrader@worldbank.org

For more project information, please visit: http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P116080

For more information, please visit the Projects website.

Europe and Central Asia Facing Significant Climate Change Threats, But Are In ‘Adaptation Deficit’

2009-06-02T14:25:40.000Z

Contacts:
In Brussels: Alexander Rowland +32-478-319939
Arowland@worldbank.org

In Washington: Kristyn Schrader +1-202-458-2736
Kschrader@worldbank.org

BONN, June 2, 2009—The World Bank today warned that the impact of climate change in the Europe and Central Asia Region* will be more significant than expected due to a lingering post-Soviet legacy of environmental mismanagement and the poor state of much of the Region’s infrastructure, leaving the countries poorly prepared to adapt.

“Europe and Central Asia suffers from an ‘adaptation deficit’ that is already challenged by recent climate variability,” said Marianne Fay, Director of the World Bank’s World Development Report 2010, and author of the new report ‘Adapting to Climate Change in Europe and Central Asia’, “which will only worsen with the consequences of projected trends in climate in the coming decades.”

Fay added that “While almost two decades have passed since the breakup of the Soviet Union and its partner countries in Central and Eastern Europe, the legacy of environmental mismanagement and oversized infrastructure in countries outside the European Union still remains a dangerous holdover from the past. It greatly worsens the countries’ vulnerability to even modest changes in the climate.”

Launched today during the UNFCCC Bonn Climate Change Talks and on the eve of ‘World Environment Day’ (June 5^th), the report says that, contrary to popular perception, the Region is significantly threatened by climate change and is already experiencing the consequences: increasing variability, warmer temperatures, changing hydrology, and more extremes – droughts, floods, heat waves, as well as windstorms and forest fires.

Average temperatures across ECA have already increased by 0.5ºC in the south to 1.6ºC in the north (Siberia) since the early 1900s and overall increases of 1.6 to 2.6ºC above are expected by the middle of the century, with the greater changes occurring in the more northern latitudes. The north is projected to see greater temperature changes in winter, with the number of frost days declining by 14 to 30 days over the next 20 to 40 years. Southern parts of the region are expected to see the greatest changes in the summer, with the number of hot days increasing by 22 to 37 days over the same period. This warming trend is significant: by mid-century, countries such as Poland or Hungary are expected to experience the same number of hot days (>30^oC) as today’s Spain or Sicily.

According to Fay, “Increases in temperature are affecting hydrology, with a rapid melting of the region’s glaciers and a decrease in winter snows. Many countries are already suffering from winter floods and summer droughts – with both Southeastern Europe and Central Asia at risk for severe water shortages. Summer heat waves are expected to claim more lives than will be saved by warmer winters.”

The report says that changes in sea level, another impact of climate change, will affect the Region’s four basins – the Baltic Sea, the East Adriatic and Mediterranean coast of Turkey, the Black Sea, and the Caspian – and the Russian Arctic Ocean. On the Baltic, Poland, with its heavily populated low-lying coast, is the most vulnerable. Along the Adriatic and the Mediterranean, storm surge and saltwater intrusion into aquifers threaten parts of the Croatian, Albanian, and Turkish coasts. Sea level rise in the Black Sea is already threatening numerous ports and towns along the Russian, Ukrainian, and Georgian coasts. In the Caspian Sea, increased surface evaporation is projected to decrease water levels by as much as 6 meters by the end of the 21st century, imperiling

fish stocks and affecting coastal infrastructure.

However, according to the report, legacy issues make the Region even more vulnerable. Under the Soviet system, economic growth was pursued in blatant disregard to natural conditions. When water was needed for irrigation, the rivers feeding the Aral Sea were diverted to the desert to produce rice, fruit, and cotton. Uzbekistan became one of the world’s largest exporters of cotton, but at the cost of destroying the Aral Sea in the process.

The historic poor environmental management across the Region has its consequences. Even countries and sectors that stand to benefit from climate change are currently poorly positioned to do so. According to Fay, “Much has been made of the fact that warmer climate and abundant precipitation in the northeastern part of Europe and Central Asia – Kazakhstan, Russia, and Ukraine – will open up a new agricultural frontier. However, any local potential benefit pales in comparison to the costs of the region’s relative inefficiency and low productivity. While world grain yields have been growing on average by about 1.5 percent per year, they have been falling or stagnant in these three countries.”

But over the next ten to twenty years, Europe and Central Asia’s resilience to climate shocks can be strengthened with improved infrastructure and environmental management systems, all of which will have positive consequences for sustainable development. Regardless of climate change, Europe and Central Asia will gain from improving its water resource management, tackling its environmental pollution problems, upgrading neglected infrastructure and housing, and strengthening disaster management. These steps will also greatly strengthen the Region’s ability to cope with the current climate.

Adapting to the changing climate will also require specific climate-related actions: investments in weather and water monitoring; the capacity to interpret and disseminate climate information; institutions to support adaptation efforts, whether by large firms or small farmers; and policies to foster incentives for informed, proactive responses to the challenges of climate change.

The Europe and Central Asian countries will need to develop strategies to reduce vulnerability to future changes. Jane Ebinger, World Bank Senior Energy Specialist, emphasized the need for stakeholder involvement in adaption. “Adaptation strategies will require steps to bring together policy makers, planners, asset owners, academics, and civil society to discuss and assess the risks a country may face from current weather and projected climate change, and identify possible adaptation measures, their costs and benefits. In addition, the experience of countries, regions, or cities currently developing and implementing adaptation plans offers valuable lessons and methodologies.”

*Europe and Central Asia Region economies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania FYR Macedonia, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan,

For more information, please visit: www.worldbank.org/eca

###

POLICY RESPONSES ENCOURAGING, BUT HOUSEHOLDS IN EU10 COUNTRIES FEELING CRISIS IMPACTS

2009-05-21T15:45:16.000Z

Contacts: In Warsaw: Anna Kowalczyk (+48) 605 282-998

akowalczyk@worldbank.org

In Washington: Michael Jones (+1-202) 473-2588

E-mail: mjones2@worldbank.org

In Zagreb: Vanja Frajtic (385) 1 2357 297

vfrajtic@worldbank.org

WARSAW, May 21, 2009 —The World Bank today revealed that while the policy responses have been encouraging, the global economic and financial crisis is having a deepening impact on households in EU10* countries and Croatia, and urged Governments to restructure their public finances to help mitigate the social costs of the crisis.

According to the new World Bank report, the EU10 Regular Economic Report, the unemployment rate is set to increase from 6.5 percent in 2008 to 10.4 percent in 2010, or from 3 million to 5 million people. This rising unemployment could derail any nascent recovery, as it could take years to reabsorb excess labor pools.

“The joblessness created by the economic crisis translates into lower household incomes, remittances, and consumer demand,” said Kaspar Richter, Senior Economist in the World Bank’s Europe and Central Asia Region at the launch of the report in Warsaw. “Falling demand for industrial workforces and more return migration from the EU15 countries will strain labor markets and social safety nets. This then feeds back to the financial sector, including a rise in non-performing loans – becoming a vicious cycle. To break that cycle, Governments must protect priority spending that improves prospects for growth and target social assistance programs.”

According to the report, the EU10 countries and Croatia are in recession, with economic activity projected to decline by around 3 percent this year, and stagnate around zero percent next year. While the crisis has hit all countries in the region, its impact differs greatly across the region. The variation is mostly related to two factors:

· Differences in the magnitude of macroeconomic imbalances at the beginning of the crisis, where countries with the largest imbalances are experiencing now the largest contractions; and

· Differences in the degree of market integration through trade, capital, and labor.

“Nowhere is the difference between countries in the region as stark as between the Baltic countries and Poland,” said Thomas Laursen, World Bank Country Manager for Poland and the Baltic Countries. “Reflecting their very large initial macroeconomic imbalances and reliance on foreign credit, the Baltic countries are suffering a severe downturn with output expected to contract by around 15 percent this year. Meanwhile, Poland, where macroeconomic fundamentals are much stronger, may still see positive growth this year.”

The contraction in global spending on capital goods and durables has hurt manufacturing exports, such as automobiles and electronics. Industrial production has contracted by over 20 percent over the last year across the EU10 region. The fall in export demand affects EU10 countries and Croatia through trade linkages, which in turn depend on trade openness, the performance of export markets, and the composition of export goods.

And after years of high profitability, the soundness of the financial sector is threatened by the economic recession. Gross capital inflows declined by two-thirds from the third quarter 2008 to the first quarter in 2009 in emerging EU10 countries.

These shocks have led to the sharp downturn and steep rise in unemployment because of the region’s deep trade, capital, and labor market integration with the EU and the world economy. Workers in countries with fixed currency regimes face a larger risk of lay-offs, as job losses are likely to increase sharply with the stark decline in output, especially in the Baltic countries. In contrast, currency depreciations have lowered the purchasing power of households’ incomes in countries with floating exchange rates vis-à-vis the euro or dollar, and increased debt service burdens for households with foreign exchange debt.

According to the report, the economic outlook remains uncertain. Some countries may experience a stabilization process that is more protracted than anticipated. Other countries that have weathered the crisis better due to sound economic fundamentals may still be at risk from a worsening external environment.

“Croatia has been holding up relatively well given the present global economic crisis. This is in part due to the Croatian financial sector, which entered the global downturn well capitalized and soundly supervised.” said Andras Horvai, World Bank Country Manager for Croatia. “These difficult times also present an opportunity to deepen structural reforms in order to soften and shorten the downturn and accelerate convergence towards EU income levels after markets normalize. It is also important to ensure the effective functioning of the safety net to protect vulnerable groups.”

So far, though, policy responses have been encouraging. The unprecedented actions by governments, central banks, and multilateral agencies have prevented a financial meltdown and stabilized financial markets to some degree, eased concerns about cross-border banking, reduced the size of the output gap, and limited unemployment increases.

“Going from slump to stabilization in the EU10 countries hinges critically on the success of policies to maintain strong trade, capital, and labor linkages. This requires policy coordination of the EU10 countries with other EU countries and advanced economies along three dimensions – fiscal, financial, and social,” said Richter.

Since the EU10 countries have in general little room for fiscal stimulus spending, embedding fiscal policy within a framework of medium-term fiscal consolidation will reassure markets. Trade linkages to high-income countries can channel some of the benefits of fiscal stimulus spending in high-income countries to the EU10 region. Economic stability in the region, as in the rest of the world, depends most of all on restoring financial confidence. This requires close coordination among parent banks active in the same country. Restructuring public finances can help to mitigate the social cost of the crisis through social assistance programs and protection of priority spending that improves prospects for jobs and growth.

“The World Bank, in cooperation with the International Monetary Fund, the European Commission, and other multilateral partners, continues to stand ready to support the economic recovery from the crisis and the protection of vulnerable households through financial support and policy advice as needed,” said Laursen.

___________________

*The EU10 countries include: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

The EU10 Regular Economic Report is published three times a year. It monitors macroeconomic and reform developments in the EU10 countries and in Croatia, and provides in-depth analyses of key policy issues. To obtain an online copy of the new report, please visit http://www.worldbank.org/eca/eu10rer

# # #

For more information about the World Bank Group, please visit www.worldbank.org

World Bank Awards Grants for Nine Civic Engagement Projects in Croatia

2009-05-13T14:54:06.000Z

Contact: Vanja Frajtić, 01/ 235 7297

E-mail: vfrajtic@worldbank.org
www.worldbank.hr

Zagreb, May 13, 2009 – Nine Croatian non-governmental organizations (NGO’s) received today grants in the amount of US$ 45,000 from the World Bank 2009 Civil Society Fund program (CSF). The grants will help the NGOs implement nine civic engagement projects supporting activities that empower and enable civic society groups to take initiatives and influence development outcomes. The activities also strengthen mechanisms for inclusion, accountability, participation and partnerships with the public sector and other civil society organizations. The Program is also focused on empowerment of marginalized and vulnerable groups in the society.

After carefully reviewing 109 project proposals from NGOs across Croatia, the selection committee, consisting of Croatia Office staff and representatives of the donor community, selected nine projects and NGOs. This year’s winning projects cover a wide range of civic engagement activities such as: empowering youth and marginalized group, social inclusion of disabled people and supporting rural development

The following NGOs and projects are the winners of this year’s Civil Society Fund program:

Environmental Association Argonauta – ‘Empowering youth for active participation in the community and promotion of social activism of youth in Sibensko-kninska County Project’ aims to empower and strengthen the capacity of the youth of the Island of Murter and the wider area to participate in local initiatives. This would be achieved through educational workshops for selected youth focusing on; the role of civil society, defining needs and priorities of the local community, project writing, etc. It is expected that the targeted group of youth will start their own youth society.

“SUNCE” – ‘Do you know your rights project’ is aimed at enhancing the capacity of parents of children with mental disabilities to more actively ascertain their rights and the rights of their children, thereby improving the quality of life for the family and including the children in everyday life of the local community. The project activities will include: workshops for parents enabling them to actively ascertain their rights, printing of an information leaflet for parents and monthly counseling sessions for parents of children with special needs.

Taekwondo club Dugo Selo: - ‘Improving the health of elderly and inclusion of children with special needs into sports project’ will enable children with the Attention Deficit Hyperactivity Disorder, who due to their hyper activity cannot function in regular sports clubs, to get involved in sports activities. The project will also motivate the elderly of the town of Dugo Selo to lead more active lives by joining the club. No sports activities are available for elderly living in Dugo Selo.

Association of social workers Zadar - ‘Civic engagement and promotion of youth volunteerism through care for elderly Project’ The project activities are aimed at improving the quality of life of elderly people in the Zadar area, through more active participation of the local community especially youth in provision of care. Under the project at least 80 volunteers will be trained in providing needed assistance to the elderly while some 200 elderly will through various types of assistance receive better care. Some of the activities aimed at the elderly include; daily assistance at their homes, social events for elderly, legal assistance and other type of assistance in dealing with institutions and various authorities.

Autonomous Center: ‘Empowering Roma councilors in cities and municipalities to effectively participate in decision making processes project’ aims to educate Roma councilors and increase their capacity and skills in fields such as: local community management, democracy and active citizenship and the new law on local self-government. The training will enable the Roma councilors to address the concerns of the Roma people more effectively and to get involved in decision making processes affecting the lives of the Roma minority.

Women’s Association ‘Prospective’ Đevrske: ‘The Project empowering women in rural communities’ - aims to revitalize the rural villages in war affected areas by promoting empowering rural women, promoting employment of women and their social inclusion. Project activities will include workshops for women where they will learn some traditional crafts which will enable them to develop entrepreneurial skills and become more involved the activities of the local community.

Open Media Group: - ‘Media campaign for affirmation and promotion of rights of women with disabilities’: Project objectives are to draw attention to women with disabilities and their role in the society and increase the awareness of the public of the problems these women are facing in everyday lives. This will be achieved through the production of an educational and promotional TV clip which will be broadcast on national television. The expected outcome of the campaign is to motivate the public to challenge the existing patterns of discrimination and to work on creating a society which will promote equal opportunities for all.

Croatian Youth Network: - Strengthening mechanisms for including youth in advisory and decision making processes at local and regional levels through training and promotion of youth advisory boards.’ The project will train 120 representatives of youth councils in Croatia in advisory and decision making processes, as well as 120 employees of local and regional authorities responsible for supporting the work of youth councils at the level of towns, municipalities and counties.

Women’s Association Vukovar : - ‘Promoting Gender Equality in Vukovar-Srijem County by Supporting Establishment of City/Municipal Commissions for Gender Equality ' is focusing on gender equality mainstreaming at the local community level. The project will promote establishment of local commissions for gender equality through raising awareness, knowledge and skills related to gender equality at the local level in a way which will include all relevant stakeholders. The project will be implemented through cooperation and coordination with NGOs, local government and the County Commission for Gender Equality.

The Program, created in 1983, complements and facilitates the social development agenda of the World Bank by providing grants through Country offices to civil society organizations. It is aimed at promoting dialogue and dissemination of information on development and to enhance partnerships with the civil society at the country level. Since the Program’s inception in Croatia in 1999, a total of US$ 319,000 has been awarded and some 97 NGOs have benefited from the Program.

For more information about the World Bank's work in Croatia, visit
www.worldbank.hr

The project Export Finance Intermediation Loan is now in the pipeline.

2009-04-29T04:00:00.000Z

The project Export Finance Intermediation Loan is now in the pipeline. To see more information, see the project information in the World Bank project database

The objective of the Export Finance Intermediation Loan Project for Croatia is to support the preservation and growth of exports by providing medium- and long-term working capital and investment finance to exporters and foreign exchange earning enterprises. The Croatia Export Finance Intermediation Loan (CEFIL) is a single component project consisting of a credit line to Croatian Bank for Reconstruction and Development (HBOR) as the Borrower and implementing agency. HBOR will wholesale the funds to private banking institutions (Participating Financial Intermediaries or PFIs), which in turn will on-lend to eligible private exporters and quasi-exporters such as the tourism and logistics sector. The envisaged project is to be implemented through HBOR's credit division. Its responsibilities will include: (i) on-lending to PFIs for final lending to sub-borrowers; (ii) ensure effective functioning of the on-lending facility to final borrowers through PFIs; (iii) on-going monitoring of the PFIs to ensure compliance with project criteria; (iv) responsibility for adherence to all fiduciary and safeguard requirements of the World Bank for final sub-borrowers; and (v) monitoring and evaluation based on key project development indicators.

Supporting Modernization of the Rijeka Port and the City of Rijeka

2009-04-17T14:30:00.000Z

Ministry of Finance
Contact: Sanja Bach
Phone: 01/ 4591 198
E-mail: sanja.bach@mfin.hr
www.mfin.hr

Ministry of the Sea, Transport and Infrastructure
Contact: Marina Halužan
Tel: 01/ 3784 594
E-mail: glasnogovornica@mmpi.hr
www.mmpi.hr

Port of Rijeka Authority
Contact: Sniježana Papeš
Tel: 051/351 117
E-mail: marketing.ri@portauthority.hr
www.portauthority.hr

The World Bank
Contact: Vanja Frajtić
Phone: 01/ 2357 297
E-mail: vfrajtic@worldbank.org
www.worldbank.hr

Rijeka, April 17, 2009 –Bojan Hlača, the Director of the Port of Rijeka Authority and Andras Horvai, World Bank Country Manager, signed today the Loan Agreement in the amount of EUR84 million (USD$122.5 million equivalent) for the Rijeka Gateway II Project., The Croatian Minister of Finance, H.E. Ivan Šuker also signed a Guarantee Agreement with the Bank, for the loan.

The Rijeka Gateway II Project is a continuation of the Rijeka Gateway Program aimed at improving the competitiveness of Rijeka as a port city, situated strategically as the gateway for transport Corridor Vb, one of the more important Pan-European transport routes. The program will modernize strategic port facilities, increase private sector involvement in the port, improve the Port of Rijeka Authority financial performance, and improve the port city environment, while better integrating Rijeka into international transport corridors.

More specifically, the Project will further develop the capacity of the port by expanding the existing Brajdica container terminal and constructing a new Zagreb container terminal to accommodate large, modern container vessels. The project will also further improve financial performance and quality of services in the port of Rijeka. In addition, the project will enable urban renewal in the City of Rijeka by relocating port activities from the Delta and port of Baroš area, which will be developed into urban areas.

“By signing the Guarantee Agreement with the World Bank, the government of Croatia continues to offer its support to the economic development of Rijeka and its port which is of strategic importance for the Republic of Croatia,” said Ivan Šuker, Minister of Finance of the Republic of Croatia

“The reasons for the new loan and priority investments include the growth of cargo traffic in Rijeka's port and its financial stability. This is why the construction of Brajdica and Zagreb terminals in the port are the project's priority components. The container handling facilities, primarily container terminal Brajdica and the construction of the full section of Zagreb Pier are considered a priority because of their operating characteristics; this is why the largest portion of the loan (EUR 70 million) is earmarked for the construction of these terminals. The other component of the project is improvement of the level of the provision of port services such as expert services, integration of information flows, environmental protection and implementation of the Master Plan. When all this is done, the Port of Rijeka will be modernized to the utmost extent and in accordance with the latest trends in the market. Together with its strategic position and its functional operationality, this will additionally improve the Port of Rijeka's position on the world sea charts,” said Bojan Hlača, Director of the Port of Rijeka Authority

Progress to date under Rijeka Gateway Program

Rijeka Port

•Sharp growth in container traffic by 1000% from 2002 to 2008
• Solid improvement of Port of Rijeka Authority financial situation
• Increased cargo handling by private sector to 28 percent

Main Components
• Completed rehabilitation of Bečko berth
• Provision of handling equipment
• Ongoing procurement for construction of new Zagreb container Terminal and extension of Brajdica Container Terminal
• Upgrade in port information system

Corridor Connection

• Opening of the following section of Rijeka Bypass (D8) Orehovica-Sveti Kuzam
• Opening of part of the Eastern Connecting Road D404 (upon completion will provide direct road access to Brajdica container terminal)
• Small arch of Krk Bridge rehabilitated - large arch of Krk Bridge started in 2007

Port City Interface

• New Passenger Terminal and improvement to breakwater close to completion
• Process launched to redevelop: Delta and Port of Baroš areas
• Obsolete warehouses demolished freeing up space
• Detailed Design Guidelines close to approval by City/Port
• Tender documents for a private developer being prepared

‘The Rijeka Gateway Program is not only about construction and modernization of the port. It is about helping Croatia’s economy become more dynamic and more competitive. It is also about enhancing the attractiveness of the port city of Rijeka by balancing urban development, corridor connections and port development,” said Andras Horvai, World Bank Country Manager for Croatia. “Rijeka is strategically located as the gateway for one of the more important European transport corridors, corridor Vb, both as a port and as a destination for tourism and business. It is the largest international seaport in Croatia, has the only container terminal in Croatia, and offers the shortest land transport distance to cities like Budapest and Belgrade.”

The Loan type is an IBRD Flexible Euro-denominated EUR84 million Loan at six month LIBOR for Euro plus variable spread, with a maturity of 23 years, including a 10-year grace period.

Since joining the World Bank in 1993, Croatia has received support from the global development institution in the form of financial and technical assistance, policy advice and analytical services. To date, the Bank has offered support for 42 operations with a total value of US$2.6 billion, and it has approved 52 grants with a total value of US$70 million.

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For more information about the World Bank's work in Croatia, visit
www.worldbank.hr

The project Rijeka Gateway II has changed to Closed

2009-04-16T04:00:00.000Z

The project Rijeka Gateway II has changed to Closed. To see more information, see the project information in the World Bank project database

The Second Rijeka Gateway Project for Croatia development objective is to develop the capacity, financial performance, and quality of services in the port of Rijeka to meet growing traffic demand, through public-private partnerships, while facilitating urban renewal by enabling the relocation of port activities. There are three components to the project. The first component of the project is port terminal development. This component includes the extension of the existing Brajdica container terminal by about 330 meters; and construction of infrastructure for a 400 meter long Zagreb container terminal. The second component of the project is port service enhancement. This component includes support in concessioning selected terminals, equipment and technical services for information flow integration and secured port access, enhanced environmental response, and technical studies to prepare for the Masterplan implementation. The third and final component of the project is project implementation. This component includes the supervision of civil works activities, audit services for the project and support in procurement and project management.

As Crisis Flu Affects Eastern Europe, Differences among Countries becoming Clearer - An Interview with Orsalia Kalantzopoulos, World Bank Country Director for the EU10 countries

2009-03-11T22:21:05.000Z

March 12, 2009

1: How is the global economic crisis affecting the EU10 countries*?

A: There are some key channels that are common, not just for the EU10 countries but for the global community – the collapse of export demand, the stalling of international capital flows, and a burgeoning crisis of confidence.

And there certainly is an important common story for the EU10 countries – ambitious reforms and EU accession, excellent well-educated labor forces, and fairly well-developed infrastructure, which fostered tremendous potential for private sector growth. The opening of the European markets presented very fertile ground for exports from these countries. So, we saw the private sector responding to these opportunities with tremendous foreign direct investment – either through specific economic activities or through the banking sector—and, more recently, rising levels of foreign borrowing, especially by banks. And, now, with the international financial crisis escalating, foreign capital inflows are drying up, and the private sector has become exceedingly risk averse – in some cases, rightly so. First credit, then output, income, and now employment in these countries, as in the rest of the world, are feeling the shock.

2: There was recently a statement put out by several Central European countries that said observers are not differentiating enough between the different countries in the region. Is that true and can you elaborate on that?

A: What is becoming clearer to careful observers as the crisis progresses is that the differences between these 10 countries are as important as the similarities. And these differences are mostly in ‘initial conditions’, that is, the situation in each country before the crisis hit, rather than how governments have responded during the crisis.

Some countries, especially the smaller ones, had fostered fast growth driven by very high levels of exports, especially exports to the rest of the EU. For these, the drying up of export markets has been a heavy blow. Others accumulated high levels of foreign borrowing by the private sector, including borrowing in foreign currencies. The mortgage markets in a number of countries were bolstered by this type of borrowing. And, of course, some countries ran much more conservative fiscal and monetary policies.

On one hand, there are several countries in the region that allowed very large imbalances in terms of current account deficits, which were mostly financed with foreign capital. Or they had very large budgetary deficits which again were financed from abroad, and also they preserved very limited foreign reserves. These countries need to adjust their policies sharply and quickly to cope with the crisis. On the other hand, there are countries in the group that implemented strong economic policies and kept high levels of reserves, and now require smaller adjustments in their policies.

And yet, nobody is immune to the crisis – everyone is affected. It is a case of a flu in the region – some people are catching a cold without really having any systemic or policy problems themselves, but they are affected because of what is going on around them.

So it is important to remember that not everybody should be put in the same basket.

3: So which countries are relatively better off at this point in the crisis?

A: Take the case of Poland. This is a country that has a very well-managed economy in terms of macroeconomic policies – both on the fiscal side and on the monetary side, as well as on banking supervision. Its policy mix is very sound, including a highly flexible exchange rate, which is helping to protect growth in this difficult external environment. Poland also has strength in structural areas, such as labor market regulations, pension reform, and health and education. Of course, there are still details that can be improved, but then this is true even in the US or Germany or France.

Poland’s economy has the same potential today as it had six months or a year ago, yet too many observers have lumped Poland into the same basket with its neighbors.

Another example of a better-off country is Bulgaria, which is running a fixed exchange rate policy through a currency board, but is compensating with extremely tight fiscal policies. Strong fiscal policy and very large accumulated reserves provide them with a cushion against these external shocks.

Other countries with strong economic management that have been unfairly thrown into the general regional basket include the Czech Republic, as well as Slovakia and Slovenia.

4: What is the World Bank advising these countries to do now to weather the crisis?

A: To some of the good performers, like Poland, where we are financial active, we recommend marginal changes on the economic policy front that would pay off in the long-term. Let me emphasize, not because there is an emergency today, but something that will bear fruit in five and ten years – for example, long-term care for the aging.

In the short-term, we are advising countries to look at their social safety nets. Because of the economic downturn, they will have more people becoming unemployed. Are these countries well-equipped in terms of social safety nets? Are their social safety nets well targeted to make sure that the poor and vulnerable are covered? Can we make sure that there is sufficient money going to health and education, so social systems will survive this difficult period?

In addition, it is critically important to preserve the productive spending that is taking place, so that in a difficult environment like this where you may be forced to cut spending in order to maintain the necessary fiscal discipline, these cuts do not end up being made across the board. Instead, they should be based on the rationalization of inefficient spending programs that will leave enough funding to both finance the ongoing reforms and to protect productive spending in health, education, and infrastructure.

Periods like this are seen very negatively normally, but they also present tremendous opportunities. If we take these as opportunities, we can really help to increase the efficiency of spending, and to do more with less. This is advice we have given to Bulgaria consistently, and that they have taken up through the years. Now one can see that this country has tremendously improved its efficiency of spending in the social sectors, and they have a more effective social safety net, so are able to reach more people with fewer resources.

In addition, there are other ways in which one can alleviate the overall cost of doing business for the private sector. And this is something that many countries are pursuing, but where probably more could be done.

So using this as an opportunity, one can increase the efficiency of the bureaucracy and the efficiency of public spending.

One additional area that we feel quite compelled to be in, together with our development partners, is to inject liquidity through well-managed banks so that the private sector in general is not completely crowded out or suffocated during these difficult periods.

5: The World Bank recently joined forces with the EIB and EBRD on a joint initiative aimed at helping the banking sector in the region. How will this help?

A: This initiative has both public sector and private sector dimensions. While the private sector dimension is likely to take the form of support, in particular, to systematically important banks operating in Central and Eastern Europe, a lot of the attention and the first efforts to help re-energize the economies will happen through the public sector, which is fine provided that it has adequate fiscal space and the focus is on activities that make good economic sense.

At the same time, you want to be able to substitute for the decreased foreign capital that has dragged down the private sector. This is exactly what the initiative tries to address – it tries to address the lack of liquidity towards the private sector and help preserve its role in the economy.

A key part of this new approach is the coordination between institutions, because there’s no doubt that the financial sectors in many of these countries, if not most, are under some degree of pressure. In addition, the financial integration across Europe that has benefited Eastern and Central Europe has also led to great interdependence across the banking sector. All the countries, irrespective of their diverse situations, have an interest in ensuring a regional approach to systemic banking issues. In some countries, the financial sector has expanded very quickly in very aggressive ways; and in others, the financial sector is feeling the impact of the local real economies’ fall into recession. Having a joint response makes sense for everyone because of the heightened impact of coordination, because it’s easier for governments, and because we can leverage resources to different areas to be more effective.

*EU10 countries include Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

EBRD, EIB and World Bank Group join forces to support Eastern Europe

2009-02-27T09:00:00.000Z

For EBRD:

Anthony Williams

Tel: +44 20 7338 6997

Email: WilliamA@ebrd.com

For EIB:

Gill Tudor

Tel: +352 43 79 8 31 53

Email: g.tudor@eib.org

For World Bank Group:

Lotte Pang

Tel: +12027584290

Email: LPang@ifc.org

Washington, 27 February 2009 - The largest multilateral investors and lenders in Eastern Europe - the EBRD, the EIB Group, and the World Bank Group - have pledged to provide up to €24.5 billion to support the banking sectors in the region and to fund lending to businesses hit by the global economic crisis.

This initiative complements national crisis responses and will deploy rapid, large-scale and coordinated financial assistance from the International Financial Institutions to support lending to the real economy through private banking groups, in particular to small and medium-sized enterprises. The financial support will include equity and debt finance, credit lines, and political risk insurance.

The response takes into account the different macroeconomic circumstances in and financial pressures on countries in Eastern Europe, acknowledging the diversity of challenges stemming from the global financial retrenchment.

EBRD President Thomas Mirow said: "The institutions are working together to find practical, efficient and timely solutions to the crisis in eastern Europe. We are acting because we have a special responsibility for the region and because it makes economic sense. For many years the growing integration of Europe has been a source of prosperity and mutual benefit and we must not allow this process to be reversed.”

“This joint action plan will help speed up the delivery of vital finance through the banks to support the real economy of hard-hit countries in Central, Eastern and Southern Europe, and particularly to help small businesses survive in these turbulent times,” said EIB President Philippe Maystadt.

“This is a time for Europe to come together to ensure that the achievements of the last 20 years are not lost because of an economic crisis that is rapidly turning into a human crisis,” said World Bank Group President Robert B. Zoellick. “I welcome the close cooperation among the EBRD, the EIB and the World Bank Group, and am committed to making this partnership work as we move forward to address the risk of a crisis of the banking sector in Eastern Europe.”

Under the two-year plan:

The EBRD will provide up to €6 billion for the financial sector in 2009-10 in the form of equity and debt finance, to banks and directly to SMEs, and trade finance.
The EIB will provide some €11 billion in SME lending facilities in Central, Eastern, and Southern Europe, of which €5.7 billion is already available for rapid disbursement, with a further €2.8 billion set for approval by end-April and further tranches expected to follow. The EIF, the EIB Group's venture capital and SME guarantee arm, is also aiming to increase its activity in the region over the next two years.
The World Bank Group will provide support of about €7.5 billion:
- IFC, through its crisis response initiatives in sectors including banking, infrastructure, and trade as well as through its traditional investment and advisory services, is expected to contribute up to €2 billion;
- IBRD intends to increased lending in Europe and Central Asia up to €16 billion in 2009-10 out of which up to €3.5 billion is envisaged for addressing banking sector issues in emerging Europe;
- MIGA will provide political risk insurance capacity of up to €2 billion for bank lending, subject to Board approval.

The response to Europe’s integrated financial markets requires fast and coordinated action; from parent banks, which own a large part of the region’s financial sectors; from systemically important local banks; from home and host country authorities of cross-border banking groups and from the European institutions and the IFIs.

By jointly addressing urgent financing needs, the three institutions in this initiative are drawing on their own mandates and specific capabilities to provide financial support.

The initiative goes beyond the pure provision of finance by engaging all parties concerned to seek appropriate solutions to the problems caused by the global economic crisis.

The IFI initiative has been developed in the broader context of the support that is being provided by parent banks to their subsidiaries in Eastern Europe, to provide capital where needed and maintaining adequate funding levels.

The IFIs welcome the support that that has already been provided to some countries by IMF programmes that have had a clear stabilizing impact and have helped to raise confidence.

The IFIs believe firmly that coordinated action among the IFIs, the bank groups, governments across Europe and the European institutions will help the financial sector in the region emerge robustly from the current crisis.

For the communique by The European Bank For Reconstruction And Development, The European Investment Bank Group, and The World Bank Group please click here

World Bank Urges Europe to Protect Eastern European Gains in Economic Growth and Poverty Reduction

2009-02-20T11:29:14.000Z

Contact:
In Warsaw: Anna Kowalczyk (+48) 605 282-998
akowalczyk@worldbank.org
In Washington: Michael Jones (+1-202) 473-2588
E-mail: mjones2@worldbank.org

WARSAW, February 20, 2009 — The World Bank urged European countries today to protect the hard-earned gains in boosting economic growth and fighting poverty that were made in Eastern Europe during the past two decades, gains that now are at risk during the global economic downturn.

The World Bank Croatia Country Office Launches the 2009 Civil Society Fund Calls for Project Proposals

2009-01-20T09:37:23.000Z

Zagreb, January 20, 2009 - The World Bank Croatia Office is pleased to inform you of the availability of funds from the Civil Society Fund for 2009. This is the eighth consecutive year that the Office has been providing funds to the civil society sector in Croatia.

The Civil Society Fund (CSF) supports activities whose primary objective is civic engagement in support of activities that empower and enable citizens to take initiatives to enhance and influence development outcomes. Activities strengthen mechanisms for inclusion, accountability, and participation. Activities also strengthen partnerships with public sector, other civil society organizations, and the private sector. The activities to be funded by the CSF could also facilitate the empowerment of citizens to have greater ownership of development processes, thus making them more inclusive and equitable. The Civil Society Fund, created in 1983, continues to promote dialogue and dissemination of information about development in forums outside the World Bank's regular operations.

Herewith, we invite Croatian NGOs to submit their applications with proposals including innovative ideas focusing on civic engagement activities. Given the available grant funds, the size of individual grants will be in the range of US$3,000 to US$7,000. Smaller grants are possible, but larger grants are rare.

Applications can be written in Croatian but applications in English are preferred. The deadline for proposals submission is March 13, 2009.

Interested NGOs and civil society organizations should send filled out application forms by post to:
The World Bank Croatia Country Office
Radnička cest 80/IX
10000 Zagreb, or by e-mail to:
vfrajtic@worldbank.org

Application Form can be obtained at the World Bank office in Zagreb, or downloaded from www. worldbank.hr . For more details on the grant program and what is financed visit www.worldbank.hr

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The project Rijeka Gateway II has changed to Active

2008-12-24T05:00:00.000Z

The project Rijeka Gateway II has changed to Active. To see more information, see the project information in the World Bank project database

The project Coastal Cities Pollution Control Project 2 has changed to Active

2008-12-23T05:00:00.000Z

The project Coastal Cities Pollution Control Project 2 has changed to Active. To see more information, see the project information in the World Bank project database

The objectives of the Second Coastal Cities Pollution Control Project are: (i) to improve the provision of efficient and sustainable wastewater services in participating coastal municipalities; and (ii) to reduce the nutrient load entering Croatia's coastal waters from, and pilot innovative 'wastewater treatment solutions in, selected municipalities. There are three components to the project. The first component of the project is wastewater investments. This component will improve the coverage of wastewater collection, treatment, and disposal services. The second component of the project is institutional strengthening. This component will improve the ability of the sector to meet European Union (EU) accession requirements; to improve the financial and operational efficiency of the municipal water and sewerage companies; and to effectively manage the project. The third and final component of the project is seawater quality monitoring. This component will improve the seawater quality monitoring systems of Hrvatske Vode (HV), and the Ministry of Environmental Protection, Physical Planning and Construction (MEPPPC) to better assess the impact of the investments in wastewater collection and treatment.

The project Coastal Cities Pollution Control Project 2 - GEF has changed to Active

2008-12-23T05:00:00.000Z

The project Coastal Cities Pollution Control Project 2 - GEF has changed to Active. To see more information, see the project information in the World Bank project database

Croatia: The World Bank Continues to Support Modernization of the Rijeka Port and the City of Rijeka

2008-12-11T22:08:31.000Z

Contacts:

In Croatia: Vanja Frajtic +385 1 2357 297

vfrajtic@worldbank.org

In Washington: Michael Jones (1-202) 473-2588

mjones2@worldbank.org

WASHINGTON, December 11, 2008 – The World Bank today approved a EUR84 million (USD$122.5 million equivalent) loan to the Port of Rijeka Authority for the Rijeka Gateway II Project.

The Rijeka Gateway II Project is a continuation of the Rijeka Gateway Program aimed at improving the competitiveness of Rijeka as a port city, situated strategically as the gateway for Corridor Vb, one of the more important Pan-European transport routes. The program will modernize strategic port facilities, increase private sector involvement in the port, improve the Port of Rijeka Authority financial performance, and improve the port city environment, while better integrating Rijeka into international transport corridors.

More specifically, the Project will further develop the capacity of the port to meet the needs of increasing traffic by expanding an existing container terminal and constructing a new one to accommodate large, modern container vessels. The project will also further improve financial performance and quality of services in the port of Rijeka. In addition, the project will enable urban renewal in the City of Rijeka by relocating port activities from the Delta and port of Baros area, which will be developed into urban areas.

‘The Rijeka Gateway Program is not only about construction and modernization of the port. It is about helping Croatia’s economy become more dynamic and more competitive. It is also about enhancing the attractiveness of the port city of Rijeka by balancing urban development, corridor connections and port development,” said Orsalia Kalantzopoulos, World Bank Country Director for Croatia. “Rijeka is strategically located as the gateway for one of the more important European transport corridors, corridor Vb, both as a port and as a destination for tourism and business. It is the largest international seaport in Croatia, has the only container terminal in Croatia, and offers the shortest land transport distance to cities like Budapest and Belgrade.”

The Loan type is an IBRD Flexible Euro-denominated EUR84 million Loan at six month LIBOR for Euro plus fixed spread, with annuity repayments and a maturity of 23 years, including a 10-year grace period.

Since joining the World Bank in 1993, Croatia has received support from the global development institution in the form of financial and technical assistance, policy advice and analytical services. To date, the Bank has offered Croatia support for 39 operations with a total value of US$2.3 billion, and it has approved 51 grants with a total value of US$63 million.

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For more information about the World Bank's work in Croatia, visit

www.worldbank.hr

Coratia: The World Bank and Global Environment Facility to Help Improve the Quality of its Coastal Waters

2008-12-11T21:32:27.000Z

Contacts:

In Croatia: Vanja Frajtic +385 1 2357 297

vfrajtic@worldbank.org

In Washington: Michael Jones (1-202) 473-2588

mjones2@worldbank.org

WASHINGTON, December 11, 2008 – The World Bank’s Board of Executive Directors today approved a EUR60 million loan and a US6.4 million Global Environment Facility Grant to the Republic of Croatia to help combat pollution along the country’s coast.

This second phase of the Coastal Cities Pollution Control Program will build on the activities of the first phase, which aimed at safeguarding the quality of coastal waters and the environment, both of strategic importance to Croatia’s tourism industry, the livelihoods of local communities and marine life. Phase two will seek to improve the efficiency and sustainability of wastewater services in 30 coastal cities where only 49 percent of the population has adequate wastewater collection systems and only 16 percent of the wastewater is treated. The overall program will help Croatia meet European Union environmental standards needed for successful EU accession.

The project will also help reduce the level of nutrients and other pollutants entering Croatia’s coastal waters from households and industries, and will test innovative wastewater treatment solutions in selected municipalities.

“Croatia is renowned worldwide for its beautiful coasts with coastal tourism generating considerable income for the country and many people making their living directly or indirectly from tourism related activities.” said Orsalia Kalantzopoulos, World Bank Country Director for Croatia. “It is therefore of vital importance to safeguard this important resource by reducing the amount of pollutants that enter seawater and to ensure that future generations can also benefit from Croatia’s rich natural heritage.”

The first component of the project will undertake investments to construct or upgrade wastewater collection, treatment and disposal systems in 30 municipalities. Four municipalities regarded as environmental “hot spots” will receive grant funds for enhanced nutrient reduction wastewater treatment facilities. The second component will focus on the implementation of the Water Management Strategy and assisting Croatia’s water sector to meet EU standards. The third component will help measure the impact of the program’s activities on the quality of seawater.

The overall cost of the project is Euro 120 million, which is supported by an IBRD Loan for Euro 60 million at six month LIBOR plus fixed spread, with a maturity of 15 years, including a 5-year grace period. The Global Environment Facility Grant of US$ 6.4 million is co-financing the project, which is under the World Bank GEF Investment Fund for the Mediterranean Sea.

Since joining the World Bank in 1993, Croatia has received support from the global development institution in the form of financial and technical assistance, policy advice and analytical services. To date, the Bank has offered support for 39 operations with a total value of US$2.3 billion, and it has approved 51 grants with a total value of US$63 million.

About the GEF

The GEF unites 178 countries in partnership with international institutions, non-governmental organizations (NGOs), and the private sector to address global environmental issues while supporting national sustainable development initiatives. Today the GEF is the largest funder of projects to improve the global environment. An independent financial organization, the GEF provides grants for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. Since 1991, GEF has achieved a strong track record with developing countries and countries with economies in transition, providing $8.3 billion in grants and leveraging $33.7 billion in co-financing for over 2,200 projects in over 165 countries.

Through its Small Grants Program (SGP), GEF has also made more than 7,000 small grants, up to $50,000 each, directly to nongovernmental organizations

and community organizations.

The World Bank Group is one of GEF’s implementing agencies and supports countries in preparing GEF co-financed projects and supervises their implementation. It plays the primary role in ensuring the development and management of investment projects. The Bank draws upon its investment experience in eligible countries to promote investment opportunities and to mobilize private sector, bilateral, multilateral, and other government and non-government sector resources that are consistent with GEF objectives and national sustainable development strategies. Since 1991, the World Bank Group has committed $1.52 billion in GEF resources and $2.25 billion in Bank group co-financing for GEF projects in 80 countries. In addition to GEF and Bank resources, it has mobilized additional co-financing of $5.48 billion from other donors.

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For further information on GEF, visit: www.thegef.org

For more information about the World Bank's work in Croatia, visit:

www.worldbank.hr

Croatia: Costal Cities Pollution Control Project 2

2008-12-11T20:23:29.000Z

WASHINGTON, December 11, 2008- The following project was approved today by the World Bank’s Board of Executive Directors:

IBRD Loan: US$87.5 million

TERMS: Maturity = 15 years; Grace = 5 years

GEF Trust Fund= US$6.4 million

Project Description: This projects aims to build on the activities of the first phase, which aimed at safeguarding the quality of coastal waters and the environment, both of strategic importance to Croatia’s tourism industry, the livelihoods of local communities and marine life. Phase two will seek to improve the efficiency and sustainability of wastewater services in 30 coastal cities where only 49 percent of the population has adequate wastewater collection systems and only 16 percent of the wastewater is treated. The overall program will help Croatia meet European Union environmental standards needed for successful EU accession.

Media Contact

Michael Andrew Jones

473-2588

mjones2@worldbank.org

For more information, please visit the Projects website.

Croatia: Rijeka Gateway Project II

2008-12-11T20:21:27.000Z

WASHINGTON, December 11, 2008- The following project was approved today by the World Bank’s Board of Executive Directors:

IBRD Loan: US$122.5 million

TERMS: Maturity = 23 years; Grace = 10 years

Project Description: This project aims to modernize strategic port facilities, increase private sector involvement in the port, improve the Port of Rijeka Authority financial performance, and improve the port city environment, while better integrating Rijeka into international transport corridors. This project is a continuation of the Rijeka Gateway Program aimed at improving the competitiveness of Rijeka as a port city, situated strategically as the gateway for Corridor Vb, one of the more important Pan-European transport routes.

Media Contact

Michael Andrew Jones

473-2588

mjones2@worldbank.org

For more information, please visit the Projects website.

The project Nature Protection Investment Project is now in the pipeline.

2008-10-10T04:00:00.000Z

The project Nature Protection Investment Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Development of Emergency Medical Services and Investment Planning Project has changed to Active

2008-10-07T04:00:00.000Z

The project Development of Emergency Medical Services and Investment Planning Project has changed to Active. To see more information, see the project information in the World Bank project database

The development objective of the Development of the Emergency Medical Services and Investment Planning Project for Croatia is to improve the efficiency and outcomes of the emergency medical services system and to strengthen the capacity of the ministry of health and social welfare to develop and implement strategic projects. There are two components to the project. The first component of the project is development of emergency medical services. This component will finance goods, services, and training to support: (i) the establishment of a National Institute for Emergency Medical Services (EMS); (ii) re-organization of pre-hospital EMS; (iii) integration of in-hospital EMS; and (iv) the use of telemedicine technology to improve EMS in remote locations. The second component of the project is institutional support for strategic planning. This component will finance goods, services, and training to support: (i) the development of priority programs, such as a hospital master plan, a human resources strategy and investment plan, and e-health project plans; (ii) the building of capacity in the ministry of health and social welfare for accessing and managing European Union (EU) funds; and (iii) the administrative management of the project.

The project Disaster Risk Mitigation and Adaptation Project is now in the pipeline.

2008-07-11T04:00:00.000Z

The project Disaster Risk Mitigation and Adaptation Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Croatia Programmatic Adjustment Loan 2 (PAL2) has changed to Closed

2008-07-06T04:00:00.000Z

The project Croatia Programmatic Adjustment Loan 2 (PAL2) has changed to Closed. To see more information, see the project information in the World Bank project database

The Second Programmatic Adjustment Loan in Croatia is the second in the series of three Programmatic Adjustment Loans (PAL), which aim to support enhanced economic growth through: (i) improving the investment climate, and (ii) reducing the size and improving efficiency of the public sector. Fulfillment of EU accession criteria and successful EU integration call for intensive structural and institutional reforms, and the PAL series supports the Government in that effort.

The project Coastal Cities Pollution Control Project 2 is now in the pipeline.

2008-03-13T04:00:00.000Z

The project Coastal Cities Pollution Control Project 2 is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Coastal Cities Pollution Control Project 2 - GEF is now in the pipeline.

2008-03-13T04:00:00.000Z

The project Coastal Cities Pollution Control Project 2 - GEF is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Karst Ecosystem Conservation GEF Project has changed to Closed

2008-01-02T05:00:00.000Z

The project Karst Ecosystem Conservation GEF Project has changed to Closed. To see more information, see the project information in the World Bank project database

The development objective of the Karst Ecosystem Conservation Project is to seek stakeholder participation towards recommended best practices in biodiversity conservation, and protection of the Karst environment. To this end, the project components will: 1) build the national capacity for biodiversity conservation, by strengthening the environmental, and biodiversity legal, and regulatory framework regarding sectoral strategies. The component will finance training; the preparation of protected area management, and planning guidelines based on market analysis and a financing strategy; and as well, feasibility studies for other eligible protected areas, comprising a biodiversity analysis, assessment of water management issues for expansion of species under legal protection. Furthermore, biodiversity inventory, mapping, and monitoring will be financed through consultant services, and necessary equipment; 2) establish community-based mechanisms for biodiversity conservation, and sustainable resource uses, through capacity building and activities for protected area management. This entails the promotion of nature-based tourism, increased public awareness, and, improved management and services for protected area management and biodiversity conservation. Additionally, a rural revitalization program will link conservation goals, and, a regional cooperation program for the Karst ecosystem conservation will be financed; and, 3) finance project management, and monitoring, which includes donor cooperation, and technical assistance.

The project Pension System Investment Project has changed to Closed

2008-01-02T05:00:00.000Z

The project Pension System Investment Project has changed to Closed. To see more information, see the project information in the World Bank project database

The development objectives of the Pension System Investment Project, are to improve Croatia's system for reporting, and enforcing social contributions, and personal income taxes, particularly for the new system of funded pensions, and, to strengthen capacities in the agencies managing the pension system, for the appropriate operation, and regulation of the multi-pillar pension system. The project's main components will: 1) finance technical assistance (TA), training, and goods for the HAGENA and REGOS agencies, to act as second pillar administrators, and regulators. The component includes consulting services, workshops and study tours, including a focus on information technology (IT); 2) predominantly finance incremental, recurrent costs associated with the activities of the Financial Agency (FINA) and the Central Computer Center for the City of Zagreb (GZAOP) in the operation of the employer reporting system, including those functions associated with the introduction of funded pensions. TA will be provided to the Ministry of Finance (MOF), to develop FINA's restructuring program, and to support MOF consolidation of control on employer tax collection; 3) support the Pension Institute (PI) in the implementation of a new strategy that focuses on a narrower range of core functions, seeking to substantially increase security, through a limited TA to improve public service; and, 4) finance the Project Implementation Unit's costs, and, additional TA by an IT specialist.

The project Croatia Stat Master Plan Support has changed to Closed

2007-12-22T05:00:00.000Z

The project Croatia Stat Master Plan Support has changed to Closed. To see more information, see the project information in the World Bank project database

The project Croatia Stat Master Plan Support is now in the pipeline.

2007-10-27T04:00:00.000Z

The project Croatia Stat Master Plan Support is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Pension System Investment Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Pension System Investment Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Real Property Registration & Cadastre Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Real Property Registration & Cadastre Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The Real Property Registration and Cadastre Project aims at building an efficient land administration system, in order to contribute to the development of real property markets. To this end, project components will: 1) improve the land registration system, operating under the Land Registration Act of 1996, to increase the security of property rights over real property, and transactions conducted under this system. Organization, and training of the Land Registration Management Unit will be supported, so as to oversee the property registration function, to be run along business lines, and include as well, monitoring and evaluation of property registration, and computerization in registry offices; 2) improve the new integrated cadastre system, focusing on developing affordable, technical standards, and regulations, and building a cadastre based on business/corporate plan principles. Moreover, training, equipment upgrading, and quality control mechanisms will be provided; 3) implement joint field operations for the cadastre, and land book registration systems, by using joint systematic registration, cadastre methods, and communications technology, under a strict institutional framework; and, 4) support project management, and institutional arrangements, through improvements in the legal framework, implementation of information and communications technology, provision of training, including the development of public awareness, and consensus building.

The project Social & Economic Recovery Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Social & Economic Recovery Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The development objective of the Social and Economic Recovery Project in Croatia, is to support the economic and social revitalization of disadvantaged, and war-affected areas, as a way to increase social cohesion. The project components are: 1) The Community Investment Program, which will fund works, goods, and services for demand-driven subprojects in Croatia's Areas of Special State Concern. Three general types of subprojects are envisaged in the areas of: social inclusion, economic revitalization, and small community infrastructure. Social inclusion subprojects are intended to improve access by war-affected, disadvantaged or vulnerable persons, and other stakeholders in the Areas of Special State Concern to community-based services, initiatives, and activities. Economic revitalization subprojects are intended to support the development of farm, and other income generation activities in local communities. Supporting existing cooperatives and SMEs will facilitate access to existing sources of funds, and capacity will prepare and implement bankable projects. Supporting the start-up of new cooperatives will be based on cooperative development in Croatia, and internationally. It will include the provision of grant-funded start up capital, and technical assistance to encourage success. Technical assistance and capacity building for the SMEs will be demand-responsive, will provide financing for a business development program, and increase in the performance of existing business advisory services (Entrepreneurship Centers and Local Economic Development Agencies). 2) The De-mining component will fund services for de-mining, and the provision of goods. Its objective is to ensure that Community Investment subprojects achieve their intended potential without the risk of anti-personnel mine accidents. 3) The Institutional Development component will fund consultant services, equipment and goods for capacity building for central, regional, and local authorities. It will support regional development approaches by central and local administrations for/within the Areas of Special State Concern, establishing participatory and technically sound practices in territorial planning, decision-making, and implementation in line with the European Union (EU) principles. It will thus provide a) capacity building on the central level, b) financial support for the development of five county Regional Operational Programs (ROPs), and c) support for local institutional development, through training and technical assistance for municipalities and organizations.