Croatian OECD Entry Could Occur in 2025, but Corruption Needs Eradicating – sat

Lauren Simmonds

April the 22nd, 2023 – Croatian OECD entry could occur in the year 2025 at the very earliest, but important reforms must take place and the country must deal with its endemic problems surrounding nepotism and corruption.

As Poslovni Dnevnik/Ana Blaskovic writes, six full years after sending the letter of intent and one year since the opening of negotiations with the Organisation for Economic Cooperation and Development (OECD), Croatia could be admitted in 2025 at the earliest, Prime Minister Andrej Plenkovic said at the recently held conference “Croatia on the way to OECD: What does membership bring?”

For the head of the government, joining the prestigious club of 38 countries, of which 22 are EU members, is the third (remaining) strategic foreign policy goal after joining the Eurozone and the Schengen area.

State companies and banks

Unlike the situation with Eurozone accession, the Croatian OECD entry process has no deadline set, and the green light depends on the rigorous evaluation of more than 20 technical committees that assess whether the candidate country, in this case Croatia, has fulfilled the reforms and aligned itself with all of the rather stringent OECD standards, policies and practices. With this in mind, it isn’t remotely surprising that the Prime Minister “retained some flexibility” regarding the entry date.

“Through the guidelines and programmes of the OECD, there will be an improvement in all those segments of Croatian society that we’ve already brought to a very high level with EU membership, and with OECD membership, we’re going to be making it even better,” Plenkovic believes. Next week, he announced, the government will revise the forecasts of GDP growth this year to 2 percent, but also announce a drop in the share of public debt in GDP to 68.4 percent and last year’s budget surplus to 0.4 percent.

What the prime minister sees as a special added value, a system that will improve the corporate management of companies in (co)ownership of the state, is also one of the biggest obstacles facing Croatia at this moment in time. There is considerable apparent resentment for the fact that state-owned companies are very open to political infiltration, the serial production of corruption scandals and operate inefficiently.

Earlier, it was clearly stated that, although not mandatory, the recommendations on the centralisation of state ownership, the professionalisation of management and the tidying up of the regulatory framework, represent ”aqis” for Croatian OECD entry.

“Through the accession process, Croatia will implement numerous reforms in the field of public administration, healthcare, trade, education, agriculture, transport and the management of state-owned companies,” assured Goran Grlic-Radman.

OECD Secretary General Matthias Cormann said that Croatian OECD accession will be a positive transformative journey as it will lead to a rise in standards and bringing income and productivity closer to the OECD average. “These aren’t just formalities but will provide tangible benefits to Croatia’s residents,” said Cormann during his very recent visit to Zagreb.

Government proposals coming soon

In the panel discussion that followed, Finance Minister Marko Primorac asserted that the Ministry of Finance is participating in the work of nine committees, and out of five OECD questionnaires, four have been completed. He announced that he will soon come out with proposals aimed at ownership policies, portfolio management, the equalisation of salaries, as well as certain “steps in the depoliticisation of Supervisory Boards and Management Boards”.

“It’s certain that Croatia’s membership in the OECD and the reforms which need to be carried out in order to make that happen will further contribute to easing the business environment and creating a more productive, competitive and profitable Croatia,” stated HUP (Croatian Employers’ Association) director Irena Weber.

”For Croatia, the benefits of OECD membership include support for reforms through the sharing of best practices, participation in global debates and support for G7 and G20 policies. All of this increases the confidence of investors, often also the credit rating,” said Gita Kothari, Deputy Director of the Directorate for Legal Affairs of the OECD.

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