30 Years of World Bank Group—Republic of Croatia Partnership

Post-Conflict Reconstruction and Social and Economic Revitalization: As the war on Croatian territory came to a close, the World Bank responded quickly and supported removal of landmines, allowing for the emergency reconstruction of bridges, roads and railway lines, the restoration of irrigation and flood protection systems in Eastern Slavonia, the revitalization of agricultural production, and the redevelopment of tourism in war affected areas, as well as for the safe return of displaced people to their land.

To support revitalization the Bank provided funding for over 400 community infrastructure and economic revitalization projects, also in war affected areas. This included construction of kindergartens, schools and community centers, repairs to water supply systems, and provision of grants to small and medium enterprises, artisans, businesses and cooperatives. Reconstruction efforts also included building 130 kilometers of new roads and repairing about 1,600 kilometers of damaged roads.

With the completion of the reconstruction efforts of Eastern Croatia, the World Bank continued to support central and local authorities in helping this region catch up with the rest of the country. The analytical work provided assisted the government in increasing the efficiency and effectiveness of EU funding for the region with the aim of unlocking its growth potential.

Economic Stability, Resilience and Public Sector Modernization: The World Bank has provided policymaking advice and financing to support fiscal consolidation targets, the sustainability of public finances, and the reduction of public debt. This also helped strengthen the responses of the authorities to unprecedented economic shocks.

For example, the World Bank helped to strengthen the role and independence of the Fiscal Board and carried out reviews of the expenditures of several ministries, contributing to Croatia’s exit from the Excessive Deficit Procedure of the European Commission.

Through Public Finance Reviews, we have been providing both solutions to debt sustainability issues and avenues for fiscal adjustment, while creating fiscal space for EU funds absorption.

The Bank supported upgrades of the tax administration system by improving business processes and introducing online services, which is reducing tax arrears, improving compliance, and increasing transparency.

We contributed to the reduction of the backlog of judicial cases through the introduction of an Integrated Case Management System in all courts across Croatia. This is allowing for the monitoring of performance and improved clearance rates and disposition time for cases. The automation of case processing has lowered the cost of doing business and is increasing transparency.

The modernization of the land administration system brought about a major reduction in case backlogs and reduced the transaction time for mortgages from 46 days to 9 days in Land Registry Offices, and from 30 to 6 days in Cadaster Offices.

Reducing Poverty and Social Exclusion: The World Bank helped to develop Income and Consumption-Based Poverty Maps at subnational levels, so policymakers can have better insight into the geographical distribution of poverty in Croatia. The maps provide estimates of poverty data at the county, city and municipality levels. With these maps, policymakers have the opportunity to better distribute funds among the population that needs assistance and improve the targeting of social welfare benefits to reduce poverty.

We are also helping policy makers and stakeholders to jointly build Croatia’s comprehensive policy framework for the fight against poverty and social exclusion, to better target social policies for the most marginalized and vulnerable segments of the Croatian society. In parallel, a monitoring and reporting system is being developed, which will allow the authorities and stakeholders to assess the effectiveness of various measures, and objectively evaluate progress; adjust the course of action, and clearly show results. 

Protecting the Environment and Supporting Sustainable Tourism: Over the three decades, the World Bank has provided financial and technical assistance, totaling US$ 335 million, covering water supply and wastewater management, water quality monitoring, flood protection, and irrigation planning.

Over 230,000 people in 23 coastal municipalities benefited from the improved provision of efficient and sustainable water services. Improvements included the construction or upgrading of wastewater collection, treatment, and disposal systems along the Adriatic coast, successfully reducing the amount of wastewater pollution entering Croatia’s coastal waters.

The World Bank supported Natura 2000 Integration Project has helped the country to comply with the EU Habitats and Birds Directives, and to build capacity in national and nature parks for better protection of wildlife. Equipment and management tools are allowing park authorities to preserve the biodiversity in the Natura 2000 network, which covers 36.5% of Croatia’s land area and a significant part of its marine area. The upgrades in visitor infrastructure and interpretation materials have raised awareness of unique habitats and species, and increased support for their preservation.

The World Bank has also helped Croatia make progress toward achieving EU waste targets by introducing Circular Economy principles in the construction and demolition waste sector. This sector has a large socio-economic value and material and carbon footprint, especially due to the 2020 earthquakes.

Through the preparation of the Blue Economy Report we are helping the authorities to identify policies for the sustainable use of the Adriatic Sea and its maritime resources for economic growth, improved livelihoods and jobs. All of this, while preserving the health of Croatia's maritime ecosystem. This is very important as Croatia is the EU country with the highest contribution of maritime sectors to the national economy.

Investing in Human Capital and Improving Lives: The World Bank supported the development of innovative programs for the community-based provision of social services to prevent institutionalization of adults and children with disabilities. In parallel, the programs also mobilized support from communities and civil society organizations to deliver services to the persons in need.

The World Bank helped introduce, the State Matura, a standardized external assessment of secondary school students’ knowledge and skills, and we supported major school construction and rehabilitation programs that reduced the number of pupils attending three-shift schools and increased the number of pupils attending single-shift schools.

We have been supporting the design and piloting of the Whole Day School (WDS) model in primary schools. The aim of the WDS pilot is to improve student learning outcomes, particularly among disadvantaged students, through longer instructional hours and improved teacher training and school infrastructure, leading to countrywide implementation of WDS.

The Bank is helping 38 public social welfare homes create their own individual transformation plans. These plans will support persons with disabilities, children, and youth to transition to living in the community with needed support instead of in an institution.

Supporting Transport and Trade: To improve the competitiveness of transport routes and increase trade the Bank has helped transform Croatia’s two largest international seaports at Rijeka and Ploče into gateways to European corridors. Activities included introducing long-term concessions by private investors, expanding current cargo terminals and building new ones, and integrating them into existing and new transport corridors.

The World Bank has been involved in the modernization and restructuring of indebted state-owned roads companies, to lower their reliance on financing from the state budget and improve their performance, planning processes, and efficiency. We helped the government to refinance more than €3 billion out of €5.2 billion of state-owned roads companies’ debt, freeing up resources to invest in other important areas for Croatia’s development.

The Bank is also supporting the development of railway transport by improving the operational efficiency and financial sustainably of three state-owned railway companies.

Promoting the Private Sector and Innovation: During the economic slump caused by the global financial crisis of 2008-2009, the Bank provided financial support to companies. As a result, the level of exports of supported companies increased by 19% through improved access to finance, while financed companies increased their exports by EUR 225 million.

Over 100 innovative companies and 40 research groups were awarded R&D financing to improve their products and services, increase their presence on the market, and find new opportunities and business lines.

The Proof of Concept R&D program financed 222 projects from the private sector and academia, helping them to bridge the gap from research to commercialization in the absence of sponsors or venture capital funds, as well as to build product prototypes and launch new products on the market.

The World Bank helped analyze the effectiveness of public funding for science, technology and innovation. The analysis also provided recommendations how to improve public funding. Recommendations included smarter allocation of funds, improved design, implementation, and governance of public support programs, as well as better monitoring and evaluation systems. 

Preparation for European Union Accession and Successful Membership: The World Bank assisted Croatia in meeting European Union requirements needed to successfully complete the accession negotiations process leading to the country’s full-fledged EU membership in 2013. In agriculture, institutions and systems have been established to comply with the Common Agricultural Policy and specialized agencies have been aligned with rural development requirements.

The Bank supported the institutional overhaul of the judiciary sector, which improved the independence, accountability and professionalization of the judiciary, which was necessary for Croatia’s EU accession.

World Bank projects have helped improve the capacity for management and absorption of EU funds by building a strong project pipeline worth more than €700 million. Projects focused on areas of innovation and science, environment and nature protection, water, ports, and the judiciary, and included provision of training to public sector institutions.

We have also supported Croatia in defining key development strategies such as the National Development Strategy and important reforms outlined in the National Recovery and Resilience Plan to optimize the use of development funds. 

Building Resilience to Shocks: When the COVID-19 pandemic struck the World Bank provided emergency financing to Croatia, which helped to cushion the economic and social effects caused by the lockdown and to speed up economic recovery.

The World Bank responded quickly to two devastating earthquakes of 2020 producing damage assessments which helped the government secure EU reconstruction funds. We also provided financing for the reconstruction of damaged public buildings including Rebro hospital in Zagreb.

The Bank is also helping private sector companies that have been hit by the COVID-19 pandemic, two earthquakes and energy challenges to recover more quickly by improving their access to liquidity. The focus is on approximately 150 companies that have reduced access to credit, including firms from less developed regions of Croatia, those owned or managed by women, and young enterprises with less than five years in operation.  

Present & Future: Our main goal for the future is to create an inclusive, green and resilient Croatia, where businesses, communities and regions have the opportunity to thrive.

To help Croatia reach those aspirations our program focuses on:

Helping authorities to implement the National Recovery and Resilience Plan (NRRP) in several key areas, including: modernization of the Research &Development framework; operationalization of the Do No Significant Harm principle, as well as, pension system sustainability.

Improving the outcomes and quality of the education system.

Modernizing Croatia’s courts and land administration systems to provide better and quicker services to people and businesses.

Making public transport companies more competitive and less reliant on state subsidies to improve services.

Supporting post-earthquake reconstruction of selected health and education facilities.

Supporting the innovation ecosystem and the research and development projects of innovative companies and researchers, and connecting public research institutions with the private sector.

Improving the business environment by simplifying processes for business registrations and the issuance of construction permits.

Providing targeted financing to crisis-affected enterprises that are otherwise viable exporters, and to specific firms, such as companies in less well-off regions, women-owned firms, and enterprises supporting youths.

Working on improvements in the investment climate and supporting sustainable investments in the financial sector, agribusiness, tourism, renewable energy, retail and manufacturing through the International Finance Corporation.

Investing in people guides our strategies and projects.

Let’s prosper together!