Inefficient state-owned companies compromise productivity of Croatian economy, IMF says

By bne IntelliNews May 2, 2019

Inefficient state-owned enterprises compromise the productivity of the Croatian economy, the International Monetary Fund (IMF) said on May 2, after a team from the fund paid a visit to Zagreb between April 23 and 30.

“Decisive action is needed to divest non-essential state assets and strengthen the financial management of essential ones. Time is of the essence, as changes in these areas are highly sensitive to broader economic conditions, and are best carried out when times are good,” the IMF said.

The fund noted that macroeconomic conditions in Croatia have remained positive. Growth is gradually moderating, inflation has remained subdued, international reserves have increased, while public debt has been declining. In addition, fiscal performance has been strong despite the guarantee payments for the troubled Uljanik shipyards.

The IMF recommended Croatia to raise living standards durably and make the economy more dynamic through structural reforms. According to the IMF, Croatia should streamline the state, increase labour force participation, improve business conditions, preserve the sustainability of the pension system and make the healthcare system financially self-sufficient.

The fund noted that without an increase in retirement age, Croatia would incur sizable debts, for which the youth of today will have to pay. Alternatively, the elderly would be consigned to living on lower pensions.

“If the pension system is not aligned with today’s life expectancy, the range of the country’s choices will be limited between these two outcomes,” the IMF said.

Related Articles

Croatian parliament dissolved to make way for summer general election

Croatian MPs voted on May 18 to dissolve Parliament to make way for a general election to take place in June or July.  It was previously unclear whether Croatia would be able to hold a ... more

Croatia heading for general election in June or July

The Croatian parliament will be dissolved on May 18 to pave the way for a general election at the end of June or the beginning of July, Prime Minister Andrej Plenkovic told journalists after a ... more

Croatia prepares for 60-90% slump in tourist overnights

Croatia is preparing for a fall in tourist overnight stays that could range from a best-case scenario of 60% to a worst-case scenario of 90% this year as the coronavirus (COVID-19) takes its toll on ... more

Dismiss