ZAGREB, Feb 25 (Hina) – Croatia has achieved a modest economic recovery, and a sustainable economic growth requires ambitious structural reforms, which the new government is prepared for, European Commission Vice-President for the Euro and Social Dialogue Valdis Dombrovskis said in Zagreb on Thursday.
Dombrovskis is currently on a two-day visit to present the Commission’s report on Croatia which has coincided with the government’s announcement of its budget 2016 guidelines.
The guidelines are based on a growth of Gross Domestic Product (GDP) of two percent and forecast a budget deficit of less than three percent of GDP and a drop in unemployment below 16% in 2016 and below 14% by the end of 2018.
After being received by Parliament Speaker Zeljko Reiner, Commissioner Dombrovskis said that Croatia was generating a modest economic recovery and repeated the EC’s estimate that over the next two years the Croatian economy would grow at a rate of 2.1%, a little higher than the European Union (EU) average of 1.9%.
At the same time though he warned of the high public debt, both private and public, the high unemployment rate, which is gradually decreasing, and of the problems in the banking sector.
Resolute government measures are required with regard to ambitious structural reforms, Dombrovskis said. Parliament has a strong role in that regard because numerous reforms need to be adopted by parliament, he added.
Even though Eurostat will release figures of the budget deficit in April, Dombrovskis said that it appeared that Croatia had failed to reduce its deficit in 2015 to below 3.5% of GDP, which would make it more difficult to achieve the goal of a deficit below 3% of GDP this year.
During talks with the parliament speaker and government members we have seen that the government is ready to face these challenges, work on the budget that will significantly reduce the budget deficit and to implement structural reforms, he said. We are prepared to work together with the Croatian government to resolve the problem of macroeconomic imbalances so that Croatia can achieve a sustainable economic growth, Dombrovskis said.
Reiner agreed that Croatia’s economy urgently required structural reforms and stressed that the new government would implement these. “Parliament will fully support the government to achieve the objectives that the EU is asking of us in order to avoid any scenario that would make Croatian citizens poorer than they are today,” Reiner said.
Our objective is to significantly boost our modest economic growth and accelerate it so that we can achieve the high standards prevalent in the most developed countries in the EU, Reiner underscored.
During his two-day visit to Zagreb Dombrovskis is scheduled to meet with President Kolinda Grabar-Kitarovic and Prime Minister Tihomir Oreskovic. He is also due to attend a joint meeting with Finance Minister Zdravko Maric, Economy Minister Tomislav Panenic, Minister of Regional Development and European Union Funds Tomislav Tolusic, and Labour and Pension System Minister Nada Sikic.