The European Commission gives five reform recommendations and advises Croatia to exit from the Excessive Deficit Procedure
The European Commission (EC) gave Croatia five recommendations which mainly apply to public finance and taxation, pensions, the labour market and social welfare, salaries, public administration and state companies, and the services sector and the judiciary.
The recommendations were published as part of the Spring European Semester during which the Commission recommended abrogating the excessive deficit procedure (EDP) for Croatia and Portugal based on their stability and convergence programmes. This is following a reduction in both Croatia’s budget deficit and public debt last year.
The EDP is a corrective mechanism the European Union conceived of to return member states' budget deficits to below 3% of GDP and public debts to below 60% of GDP in line with the Maastricht criteria.
Croatia has been in the EDP since January 2014 when the Council of the EU gave it until the end of 2016 to cut the budget deficit to 2.7%. Last year, Croatia cut its deficit to 0.8% of GDP from 3.4% in 2015.
According to the Commission’s Spring Economic Forecast, Croatia's deficit could increase to 1.1% of GDP mainly due to tax reform and then fall to 0.9% in 2018. The public debt is forecast to fall to 81.9% of GDP this year from last year's 84.2% and to 79.4% in 2018.
Croatia's public debt is projected to remain above 60% of GDP for a long time, but the Commission does not look only at nominal figures in order to see a trend of decline, which Croatia is already showing.
Contact
Jelena Bilušić
Head of Relationship Management
Jelena.Bilusic@unicreditgroup.zaba.hr
GSS Croatia