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The Effect of Long-term EU Budget 2021-2027 and Recovery Package on Croatia's Post PandemicEconomic Recovery

In ten years time Croatia will undoubtedly become a richer country in absolute terms. However, the real question remains whether Croatia will succeed in narrowing its development gap with the rest of the EU, in order to stem the emigration of its brightest citizens and to attract new talents from abroad. This can be averted by smarter and more efficient use of EU funds, as described above. Furthermore, EU funds are not a panacea and they can only work their true magic if complemented by an ambitious set of economic and political reforms. Unless current and future Croatian Governements do not commit to pro-market reforms and the burgeoning public sector remains at the core of state-led growth model, the historical opportunity to catch-up more developed EU peers will be irreparaby lost. Therefore, the current Croatian Government should institute far more ambitious reforms than those outlined in the NRRP. EC will definitely track Croatia’s progress within the European Semester and institute potential sanctions if cases of egregious misuse of EU funds occur or no reforms at all are implemented. However, it is not reasonable to expect that the EC shall use its power to press any Croatian Government to focus on high-hanging fruits, or reforms that contain the biggest potential to significantly lift Croatia’s potential growth rate. This is only and alone up to a reform-minded Croatian Government that knows how to compensate opponents of those reforms by major financial shot in the arm from the long-term EU budget and RRF. Over next three years there are no elections in sight. This is the right opportunity and timing to embark on this reform agenda for the sake of all Croatians and their European peers.

NGEU, MFF 2021-2027, ESIF, Croatia, economic growth, Croatian Government, EU

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