Hahm met with members of the Croatian Parliament's Finance and State Budget Committee and Economy Committee to present to them a draft partnership strategy between the World Bank and Croatia for the 2014-2017 period.

In the area of macroeconomic sustainability, Croatia needs to streamline its expenses and improve revenue management and public debt management, Hahm said.

In the area of structural reforms, the World Bank offers its assistance in establishing a sustainable welfare system and improving competitiveness through greater participation of the private sector in economic activity.

Assistance which the World Bank offers to maximise the benefits of EU membership includes building the institutional capacity to absorb EU funds and encouraging the participation of the government in EU-sponsored regional initiatives.

Explaining why the World Bank has chosen these three key areas, Hahm noted that Croatia had been in a recession for the fourth consecutive year and that its recovery was uncertain, adding that the country now needed intense fiscal adjustment which was not envisaged in the 2013 budget.

Describing the current macroeconomic situation, Hahm said that foreign debt was still high, although the current account deficit had been reduced, and that there was a great need for servicing public debt, banks' debt, non-banking debt and the current account deficit. At the same time, unemployment is growing, the population's activity rate is on the decline and economic competitiveness is falling, he added.

Hahm said that Croatia needed to create a favourable environment for new jobs by improving the efficiency of public administration, reducing corruption, improving access to financing, and relaxing restrictive labour regulations.

Croatia desperately needs economic growth that should come from the private sector, whose importance has not been recognised enough, he said.

Hahm concluded by saying that the World Bank would remain committed to cooperation with Croatia. He noted that no major loans were planned because Croatia would have access to considerable finance from EU funds and it was important to help the country in absorbing those funds.

The Chairman of the Committee on Finance and State Budget, Srdjan Gjurkovic, said that Croatia was implementing fiscal consolidation and that it had macroeconomic stability. He added that the government was taking steps to improve administration efficiency and reduce taxes, noting that the restructuring of the public sector should be completed next year.

Domagoj Ivan Milosevic of the strongest opposition party, the Croatian Democratic Union (HDZ), said he agreed that it was necessary to achieve growth, but not by raising taxes. He said that Croatia had huge potential for foreign investments, but no strategy to attract them.

The Chairman of the Committee on the Economy, Igor Radjenovic, said that the government's policy was not to raise taxes and that structural reforms had not been carried out because the previous government had not had the political will to implement them.

Mirela Holy of the ruling Social Democratic Party (SDP) warned that many Croatian companies, because of their insufficient size and financial impotence, would not be able to participate in projects co-funded by the EU, and asked the World Bank for assistance to that effect.