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Speeches & Transcripts March 13, 2019

Remarks by Vice President for Europe and Central Asia Cyril Muller at 25th Anniversary of Partnership with Croatia

Your Excellency Prime Minister Plenković,

Your Excellency Minister Marić,

Your Excellencies former Ministers of Finance,

Representative of President Grabar Kitarović,

Your Excellencies,

Ladies and Gentlemen,

 

I would like to start by thanking you all for attending this event.

I am honored to have the opportunity to celebrate with all of you 25 years of partnership between the World Bank Group and Croatia in this Concert Hall, named after a composer of the first Croatian opera (Love and Malice) and one of the founders of Illyrism. This venue carries a lot of symbolism.

I want to use this opportunity to remind us of Croatia’s remarkable achievements over the last 25 years, during which the World Bank Group has been Croatia’s proud partner. I will then move to look towards the future.

The World Bank made early investments in the country as far as back as 1969. The very first was for highway construction and two years later we financed a tourism project, the Babin Kuk resort near Dubrovnik. A visionary investment at that time.

But it is really in the 1990s, with an independent Croatia, that we can start speaking of the partnership we are celebrating today.

Croatia joined the World Bank Group as an independent state in 1993. Our first loan amounting to $128 million was provided for Emergency Reconstruction to help with the repair and reconstruction of war-damaged and destroyed roads, railways, power, water, housing development and agriculture. 130 km of new roads were built and about 1,600 kilometers repaired in war-affected areas. We financed the removal of landmines, constructed kindergartens, schools, community centers, and supported businesses in the post-conflict areas.

In the Spring of 1998, we opened our office in Zagreb. And from the late 90’s, our focus was on supporting Croatia’s transition to a market economy, while protecting the most vulnerable members of society. Our first Poverty Assessment was done in 1999 and the findings contributed to the first-ever Croatian Strategy for Poverty Eradication.

To respond to the banking crisis in 1998-99, Croatia and the World Bank joined forces to reform the financial sector and we provided budget support, through the Enterprise and Financial Sector Adjustment Program. And together, we helped build the capital market and its institutions, supported a multi-pillar pension system. It is then that the World Bank started its long engagement in Rijeka and Ploce ports, to help modernizing them, increase trade, and connect Croatia globally.

When in October 2005 the European Union opened accession negotiations with Croatia, we were ready to support the transformation and building of new institutions. The World Bank’s engagement shifted to institution-strengthening and governance reforms, while continuing to implement new projects supporting critical sectors to prepare the country for EU accession.

The journey to enter the EU has not been easy and the financial crisis hit Croatia hard, and when the country called upon the World Bank Group to provide support, we were ready to help with financing and advice, which eventually led to Croatia exiting from the Excessive Deficit Procedure.

Once Croatia entered the EU in mid-2013, we shifted our program to respond to the country’s vision of the future and helped Croatia integrate into the EU markets and build capacity for management and absorption of EU funds.

Now, five years into the European Union, we continue to provide support to modernize ports, roads and railways companies, health and land administration systems, help identify growth opportunities in the less well-off region of Slavonia, Baranja and Srijem, and improve the use and design of EU Funds, by supporting the preparation of a new National Development Strategy for 2030.

Our International Finance Corporation, with its focus on the private sector, helps improve the investment climate and invests in the financial sector, agribusiness, tourism, renewable energy, retail and manufacturing.

Under the new Croatia Country Partnership Strategy, to be implemented for the next five years, we plan to expand the use of all our instruments, prioritize our support, and refocus it to building institutions for a resilient, equitable and competitive Croatia.

As the Video we have just watched highlights, this journey has been about partnership and friendship between Croatia and the World Bank Group, always with the objective of helping all Croatians live productive lives. We can all stand proud of the results achieved over the last 2 decades.

In numbers, the World Bank Group has provided over 5 billion Euro to Croatia and helped implement more than 80 projects. Additionally, more than 300 studies and technical assistance projects were carried out to help strengthen institutions and support policy making.

But results are what matters and how we touch people’s lives. So, allow me to highlight some achievements we accomplished together: 

  • We have helped restructure public enterprises (ports and roads and railways in particular) making them more competitive and financially less reliant on state subsidies.
  • The land administration and cadaster system are being modernized, leading to major reductions of case backlogs and lower transaction times for mortgages.
  • 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 niches. 
  • Over 230,000 people in 23 coastal municipalities benefited from improved provision of efficient and sustainable water services.
  • We helped protected wildlife and fauna in national and nature parks as part of the EU Natura 2000 Integration Project.
  • We have helped EU funds absorption by building a project pipeline worth more than EUR 700 million and training staff in public sector institutions. 

You will be able to see some of the testimonies of the beneficiaries in the entrance hall, talking about such results.

For my part, I have travelled to Croatia several times in my life. My first trips were on a budget, during my youths, and every time I return, I witness Croatia’s progress and beauty. While the recent recession lasted too long, Croatia has a real opportunity to thrive and move closer to the EU’s living standards.

Croatia has the potential to become a society with accessible economic opportunities for all its citizens, regardless of location, gender, ethnicity, age, or any other personal characteristic.

If annual growth can sustainably be accelerated to above 3 percent, economic convergence with the EU can be achieved within a generation.

What Croatia does today will shape its future. Croatia can transform itself from a country where the labor force looks for opportunities abroad, to a country that the world looks at with interest for investments and for great living opportunities.

As requested by the many stakeholders we have been speaking with while designing our strategy, the Bank needs to be ambitious, focus on challenging tasks, and bring knowledge and solutions to Croatia. We intend to respond to Croatia and the Government’s demands to continue to accompany, advise, and provide the necessary finances to build the better future for all citizens of Croatia.

Our goal for the future is to help Croatia continue to create a fair and inclusive society where businesses, communities and regions can prosper for the benefit of everyone. Where public institutions provide effective and efficient services to people and where Croatia’s natural capital is preserved and used in a sustainable way. This is our vision for the years to come. Investing in people will guide our strategy and projects.

Creating a much more favorable business environment, enabling the deep transformation of the public sector and its institutions, and allowing the overhaul of the education sectors are necessary preconditions to enable Croatia to thrive.

I would like to encourage the country to accelerate the necessary reforms that will unleash the private sector potential of the country and build the human capital for the future.

These last twenty-five years have been an amazing journey and we are happy and honored to have been a partner for some of Croatia’s most memorable successes. I could not finish without thanking you all again, and all the stakeholders and people of Croatia, as well as my colleagues who invested their ideas, energy and hard work to achieve these impressive results.

Let’s continue this journey towards a prosperous and inclusive Croatia. We stand ready to accompany you on this journey.

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