European Structural and Investment Funds in Croatia

Excerpt from the COM(2015) 639 final, ANNEX II: Country fiches:

1. ESIFs in Croatia

Economic and social challenges in the ESIF context

The protracted recession has reduced Croatia’s real GDP by about 12.5 %, while its unemployment rate doubled from 8.6 % in 2008 to 17.3 % in 2014. Recent years have shown the need for structural changes, in particular to address the fiscal imbalances, implement labour market reform, develop sustainable social and health protection systems, improve the business environment and reform the state administration and judiciary. The national authorities have carried out a set of reforms as part of the European Semester. A significant proportion of the EUR 10.676 billion allocation from the ESI Funds for 2014-2020 has been earmarked for carrying out reforms and meeting national targets as part of the Europe 2020 strategy.

Main priorities and results

ESI Funds will be used to stimulate R&D&I in Croatia, making its economy more innovative and competitive and helping it to meet its national commitment to spend 1.4 % of GDP on R&D by 2020 (2012 figure: 0.75 %). Croatia also aims to increase the value added per employee in SMEs by 50 % by 2023.

Croatia has one of the lowest labour-market participation rates in the EU, particularly affecting young people, the low-skilled, older workers and women. Croatia’s national target is an employment rate of 65.2 % by 2020 (2012 figure: 55.4 %), with specific focus on increasing the employability of young people not in employment, education or training. In this context, ESI Funds will tackle the mismatch of workers’ skills by reforming tertiary education and the public employment service, and supporting vocational education and training and lifelong learning. Funds will also be spent on supporting self-employment and reducing long-term unemployment.

Croatia will spend ESI Funds on building infrastructure that can boost economic growth: the focus will be on the development of key networks (TEN-T), sustainable urban transport and making its regions more accessible. In addition, Croatia aims for 53 % of households to have broadband coverage by 2023 (compared with 33 % in 2013).

The ESI Funds will also be spent on implementing the EU environmental acquis: the aim is for one million inhabitants to have improved water supply and wastewater treatment services by 2023. Funds will also be used to reduce the proportion of landfilled municipal waste from 83 % in 2012 to 35 %, to put 40 % of Croatia’s Natura 2000 management framework in place and to make air quality information available for 100 % of the population in urban areas. More than EUR 160 million ESI Funds will be invested in renewable energy production, while the average annual heating and cooling energy demand in retrofitted public buildings should reach 50 kWh/m2 by 2023 (the 2013 figure was 250 kWh/m2).

Croatia is facing social challenges in the form of high levels of poverty and social exclusion; the national objective is to reduce the number of people at risk of poverty or social exclusion by 150 000 by 2020. To achieve this goal, ESI Funds will be invested in promoting the social and labour market integration of vulnerable groups, improving access to healthcare, improving access to high-quality social services (including support for the shift from institutional to community-based services), preventing and tackling discrimination, developing social entrepreneurship and implementing urban regeneration projects.

Finally, ESI Funds will be used to support the national reform of Croatia’s public administration through better and sound management of public finances, cutting unnecessary procedures, developing e-administration and fighting corruption. In addition, dialogue with social partners and civil society will be further developed and the justice system will be made more efficient by speeding up legal procedures and ensuring impartiality. ESI Funds will contribute to making Croatia’s food production, aquaculture and fisheries sectors more competitive and environment-friendly. Funds will be used to restructure and modernise more than 1 800 farms, provide start-up aid to at least 1 000 young farmers, thus improving generational renewal of rural areas, and support the use of biodiversity management contracts covering more than 101 000 ha of agricultural land. Croatia is also aiming to achieve balanced regional development and reduce the economic downturn in rural areas, including through the development of alternative economic activities. In addition, ESI Funds will be used to improve and diversify the local economy in coastal areas, strengthen the country’s growth potential in the marine and maritime sectors, make fisheries and aquaculture more sustainable and strengthen aquatic ecosystems and biodiversity. In particular the volume of aquaculture production is envisaged to increase by 400%.

Use of financial instruments and territorial tools

Croatia expects to allocate more than EUR 440 million ESI Funds to financial instruments providing support for SMEs, R&D&I, energy efficiency, urban transport, self-employment and social entrepreneurship. Considering that it had no financial instruments in the previous programming period, this is an ambitious programme. It needs to look more closely at using financial instruments in ICT, urban development and transport infrastructure.

Croatia will put at least EUR 400 million into integrated territorial investments to be used for sustainable urban development and into community-led local development projects in rural areas, fisheries and maritime areas. Local development strategies under LEADER will cover 1.5 million people in rural areas during the programming period 2014-2020.

Key information

2. Pre-conditions for effective and efficient use of ESIFs

Before the end of 2016, Croatia will have adopted a set of strategies and investment plans to fulfil the ex ante conditionalities (EACs) for effective and efficient use of ESI Funds. It plans inter alia to adopt a smart specialisation strategy, broadband and digital strategies, a strategy for the management of natural risks, a water pricing strategy, river basin management plan, waste management plans and waste prevention programmes, an integrated transport strategy, a hospital master plan, a programme for the development of the vocational education and training system and a development strategy for public administration. Two of the EMFF-specific EACs, related to administrative capacity for the implementation of control and report on fishing capacity are only partly fulfilled; action plans to their fulfilment should be implemented by 31 December 2016.

3. ESIF management

A national coordination (governmental) committee will coordinate implementation of the four national programmes and the European territorial cooperation programmes. Given the sharp increase in Croatia’s ESI Funds allocation in 2014-2020, the technical and administrative capacities should be increased substantially, both within the management and control system, as well as at beneficiary levels.

4. Simplification for beneficiaries

Different tools will be developed, including a website for beneficiaries, a coordinated mechanism to provide information on ESIFs, and the simplification of procedures for project application and selection. Croatia has also envisaged the use of a simplified costs option. 

Source: COM(2015) 639 final, ANNEX II: Country fiches to the Communication from the Commission Investing in jobs and growth - maximising the contribution of European Structural and Investment Funds, Brussels, 14.12.2015