ZAGREB, September 25, 2014 — Minister of Finance, H.E. Boris Lalovac, and the World Bank’s Country Manager for Croatia, Mr. Carlos Piñerúa, today signed a Loan Agreement in the amount of EUR70 million (US$95.55 million) with the Republic of Croatia for the Social Protection System Modernization Project, which is aimed at improving the efficiency and effectiveness of social assistance and services to the country’s most vulnerable groups.
Croatia is going through a prolonged recession, which has led to an increase in poverty. Social protection spending has been largely protected during this period, however, the social protection system has become fragmented and costly to administer. To address the weaknesses of the system, the Government adopted a new Social Welfare Act, which provided the legislative basis to initiate a wide-ranging set of reforms of the social protection system.
The project will support the implementation of reforms in five key areas that are necessary to improve the social protection system: (i) consolidation of social assistance benefits administration under a one-stop-shop, providing a single service point to social assistance beneficiaries to apply for and receive a range of cash benefits; (ii) unification and harmonization of certification of disability, resulting in a faster, more transparent, and more efficient certification process for applicants; (iii) reduction of error, fraud, and corruption in social protection benefits; (iv) de-institutionalization of vulnerable children and adults by increasing family-type environments outside of the institutions and improving care and quality standards for these groups; and (v) provision of more tailored services to the unemployed and long-term unemployed to help them return to the labor market.
“We would like to thank the World Bank for the support it is providing through this Project, to the reforms the Government is implementing in the social protection system aimed at rationalizing and improving the efficiency of the system. The Project will help implement some of the measures which are part of the Government’s fiscal consolidation program, such as the establishment of a one-stop-shop which is expected to bring fiscal savings as a result of the consolidation of administration of social assistance benefits.” said Boris Lalovac, Minister of Finance of the Republic of Croatia.
“This loan is a precondition for the continuation of the Government of Croatia’s reform measures on the consolidation of the social protection system and is also in line with the recommendations of the European Commission to the Republic of Croatia to further reforms in the social protection system,” said Milanka Opačić, Deputy Prime Minister and Minister of Social Policy and Youth of the Republic of Croatia.
“We are very pleased to support the Croatian Government in its efforts to make the provision of social protection services to the most vulnerable groups better targeted, better organized, and less of a strain on public finances. This is especially important during periods of economic downturn when the demand for social protection is on the rise, while the resources to finance it are increasingly scarce,” said Carlos Piñerúa, World Bank Country Manager for Croatia.
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 53 operations amounting to around US$3.5 billion, and approved 53 grants with a total value of US$70 million.