WASHINGTON, May 5, 2011 - The World Bank’s Board of Directors today approved a EUR150 million (US$ 213 million) Economic Recovery Development Policy Loan to the Republic of Croatia. The loan is the first in a series of two loans aimed at supporting the Government of Croatia’s efforts in accelerating sustainable economic recovery.
Specifically, the loan supports reforms in two broad areas. The first area focuses on fiscal consolidation efforts through expenditure-based adjustments in public administration, health, pensions, and social welfare areas. These efforts have led to improvements in the management of public spending and have strengthened the medium-term sustainability of public finances, with the goal of preserving macroeconomic stability.
Second, the loan supports the development of a dynamic private sector by improving the business environment and reducing state involvement in the corporate sector. Croatian authorities have already taken measures to enhance labor market flexibility, reduce administrative and regulatory barriers for businesses, and speed up privatization of state-owned companies.
‘We are pleased that the Croatian authorities are moving forward with the implementation of the Economic Recovery Program and that important reforms to promote sustainability of public finances are under way,’ said Peter Harrold, Country Director for Central Europe and the Baltic Countries. ‘At the same time, we encourage the authorities to accelerate reforms, since deepening reforms before entering the European Union will maximize the benefits that Croatia derives from membership.'
‘Cooperation with the World Bank (International Bank for Reconstruction and Development) is of exceptional importance and we value the Bank’s support from the very beginning of this cooperation. It remains so today, when Croatia is at the doorstep of the European Union. By approving this new loan, the World Bank has confirmed its support for the Government’s Economic Recovery Program adopted in 2010 with the aim to support recovery and mitigate the social impact of the global financial crisis. We believe that this development loan will provide the appropriate tool for the Bank’s support in addressing our medium term policy and institutional reform’, said Martina Dalić, Minister of Finance of the Republic of Croatia.
The loan is the first in a series of two Development Policy Loans approved at 6-month EUROIBOR for EUR plus a fixed spread (which would currently translate into an interest rate of about 2.5 percent) with a 15-year bullet repayment pattern.
Since joining the World Bank in 1993, Croatia has benefited from financial and technical assistance, policy advice, and analytical services provided by the global development institution. To date, the World Bank has supported 46 operations amounting to around US$ 3 billion, and approved 52 grants with a total value of US$ 70 million.