Serious warnings for Croatia from Brussels.
European Commission Vice President Vladis Dombrovskis came to Zagreb with a dramatic warning that Croatia could be the first EU member state which could be subjected to a corrective measures process, a form of supervision by Brussels since it has not implemented the recommended reforms, reports Večernji List on February 28, 2016.
Although the new government cannot be held responsible for the unfulfilled promises made by the previous government, the increased diplomatic pressure on Zagreb comes ahead of the budget and reform package finalization. The plans are expected to be presented to Brussels by 15 April. Despite all the talk about reforms, the budgetary guidelines that were published this week show that the Orešković government would prefer to retain the policy of small steps, without any significant changes to the structure of government spending.
Despite the fact that last year Croatia achieved the record value of goods exports and tourism revenues, the rate of GDP growth stalled at 1.6 percent. The European Commission came out with the most pessimistic warning about Croatia made by any major international institution, and that is that the modest growth which has been achieved last year could be the maximum if the new government continues with the former government’s policies.
“The situation is very serious”, said Prime Minister Tihomir Orešković after his meeting with Dombrovskis. He added that his predecessors were responsible for such results. “Unfortunately, we lost four years. The reforms promised by the previous government have not been successful”, said Orešković and added that he himself “would talk less and work more”.
“It is important to act now. Today’s meeting was a good opportunity to be introduced to the new government’s plans. We are encouraged because we see that there is the momentum for reforms”, said Dombrovskis who offered technical assistance to Croatia.
The previous government has been criticized for ignoring most of the recommendations that were supposed to bring public debt reduction, accelerate growth and improve the long-term prospects for the country. State Bureau of Statistics recently announced that in the last quarter of 2015 the GDP growth was lower than expected – 1.9 percent. The somewhat lower growth than projected in the government guidelines will increase the pressure on ministers to cut more than planned.
Economist Velimir Šonje warned that Croatia needs two to three years of serious fiscal adjustment to consolidate its public finances on the basis of structural reforms, privatization and better use of state-owned assets.