Croatia Needs to Cut Public-Sector Costs, World Bank’s Gill Says

Bloomberg

6/5/2012

Croatia needs to restructure its public sector to reduce spending and increase investment in innovation 
as it prepares to join the European Union next year, the World Bank said. 

“Croatia spends more than 40 percent of gross domestic product on government services, about 14 percent 
on social protection, and only 0.8 percent on innovation,” Indermit Gill, the World Bank’s chief economist 
for Europe and Central Asia, said at a conference in Zagreb today. “The country will be joining the EU 
from the position of weakness.” 

Croatia, which is set to become the European Union’s 28th member in July 2013, is struggling to attract 
investment as it recovers from a two-year recession. Prime Minister Zoran Milanovic said in January the 
government will invest 8 billion kuna ($1.3 billion) from reconstruction banks and the EU’s funds in 
infrastructure projects to revive investment in energy and tourism. 

Croatia’s economy will grow 0.8 percent this year, according to a government forecast, while the World 
Bank in April estimated a 1 percent decline.