If it wants to pull out of the crisis, Croatia must maintain financial stability, continue with structural reforms and maximally utilise the benefits of European Union accession, the World Bank's director for Central European countries, Peter Harrold, told a news conference in Zagreb on Friday.
In his farewell meeting with the Croatian press, prior to retiring, Harrold said he remained optimistic about Croatia's possible economic recovery, especially if it will know how to utilise the EUR 10 billion that will be at its disposal from EU funds in the next seven years.
But Croatia will have to be well-prepared to be able to draw that money, he said, adding that if he was in Prime Minister Zoran Milanovic's shoes, he would help Regional Development and EU Funds Minister Branko Grcic assemble the best experts to work on projects to attract the European funds.
The Croatian government also needs to do its best to attract foreign direct investment and to finance public investments from the EU instead of domestic sources, he said.
You must maximally utilise the generous financial assistance Croatia will receive in the first years of EU membership, Harrold said, adding that if Croatia missed this chance, it would have to pay more into the EU budget than draw from it.
However, if it is successful, Croatia will not have to worry if the EU crisis should be prolonged, as recently warned by German Chancellor Angela Merkel, who said Europe would need five years for economic recovery.
Croatia and its economy are not big in relation to the European scale, but small countries recover more easily than large countries. Also, Croatia is not integrated with any large market, as is the case with Slovakia with Germany for example, so any crisis on a large market will not affect it that much, said Harrold.
Croatia has various options, he said, recalling the example of the Baltic countries, which posted two-digit declines when the crisis broke out but were now recovering at rates of five to six per cent because they turned to exporting to Russia and Central Asia.
Harrold reiterated that the government must continue with fiscal consolidation as well as with cutting costs and reducing the deficit in the new budget in order to maintain its credit rating. It should also continue with efforts to shift the tax burden from labour to assets.
The World Bank does not expect big changes in Croatia's gross domestic product in 2013, neither a growth surge nor a disaster, and it will present its forecast in mid-December, reporters were told.
