PAL2 is a two-tranche loan, of which the first tranche in the amount of EUR 100 million will be disbursed after the parliament ratifies the Loan Agreement, while the second tranche of EUR 50 million is expected to be disbursed by the end of this year. The disbursement of the second tranche will be conditional on the continuation of reforms and their completion within set deadlines.
The goals supported by PAL2 are the reduction of the size of the public sector and enhancement of its efficiency through the reform of the public administration, health and railway sectors, and the improvement of the investment climate by encouraging the productivity of the private sector.
The goals also include the completion of the privatisation process and the reduction of the state share in companies. By the end of this year, bids will be invited for the privatisation of the Pula-based "Uljanik" shipyard and new bids were announced for the sale of the "Vupik" industrial farm.
The goals of the PAL2 program also include reducing government subsidies to companies, modernising the judiciary and removing administrative and regulatory obstacles to doing business.
Before the signing ceremony, Finance Minister Suker and representatives of the Privatisation Fund, the ministries of justice, environmental protection and construction, health and social welfare, and the Central Office for Administration, spoke about their plans regarding PAL2.
Minister Suker presented macroeconomic indicators, and date on progress in the privatisation process, in the modernisation of the judiciary and the system of physical planning and construction, and in public administration, as well as on the improved efficiency of the health care system.
Speaking about Croatia's achievements, Seth cited lower unemployment, fiscal consolidation, the growth of GDP and of the share of private enterprises in the creation of new value.
By making these achievements, Croatia has done only a half of the job, Seth said, adding that the country still had to solve the problem of a high external debt, improve the efficiency of public administration, and create a favourable investment climate.
Suker reiterated that there was no rise in insolvency, that the state was not generating insolvency, and that contrary to the opinion of the World Bank Office in Croatia, the payment of pension arrears could not be included in the calculation of the deficit because pension arrears were paid from a special fund and were not connected with the budget.
World Bank officials also inaugurated the new World Bank Office in the Zagreb Tower building in Radnicka Ulica Street.