Bloomberg News

Croatia Needs to Cut Public-Sector Costs, World Bank’s Gill Says

June 05, 2012

Croatia needs to restructure its public sector to reduce spending and increase investment in innovation as it prepares to join the European Union next year, the World Bank said.

“Croatia spends more than 40 percent of gross domestic product on government services, about 14 percent on social protection, and only 0.8 percent on innovation,” Indermit Gill, the World Bank’s chief economist for Europe and Central Asia, said at a conference in Zagreb today. “The country will be joining the EU from the position of weakness.”

Croatia, which is set to become the European Union’s 28th member in July 2013, is struggling to attract investment as it recovers from a two-year recession. Prime Minister Zoran Milanovic said in January the government will invest 8 billion kuna ($1.3 billion) from reconstruction banks and the EU’s funds in infrastructure projects to revive investment in energy and tourism.

Croatia’s economy will grow 0.8 percent this year, according to a government forecast, while the World Bank in April estimated a 1 percent decline.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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