The new strategy envisages a four year lending program of up to $1.5 billion, depending upon performance, compared to $660 million for the previous CAS, the Bank said in a press release, which was issued after yesterday's meeting..
"The main objective of the CAS is to support the government"s growth and reform strategy for successful EU accession and integration, while ensuring broad participation in growth and sustainable natural resource management. The strategy calls for a shift in the sources of growth from public sector expenditures and consumption to private sector investment and productivity" read the press release.
"The goal of the new CAS is to support much of the effort Croatia needs to undertake during the next four years to meet challenging EU accession requirements, and thus we welcome the proposed start of negotiations in March," says Anand K. Seth, World Bank Country Director for Croatia, "However, the CAS goes beyond supporting harmonization initiatives required by the Acquis and focuses on accelerating important structural and institutional reforms to ensure faster and equitable growth and enhance Croatia"s ability to cope with competitive pressures in the EU," the press release quoted Seth as saying.
According to the Bank's analysis, since the 1999 recession, Croatia has enjoyed solid but moderate economic growth with low inflation. "However, the current growth pattern, mainly driven by public sector investment and consumption, is not sustainable. Croatia"s top priority is to enter the EU with a competitive and growing economy and the institutional capacity to meet the demands of membership. The new government"s strategy emphasizes reforms that would lead to accelerated and sustained growth within a framework of social cohesion," read the press release.
The new CAS was prepared in cooperation with the Ivo Sanader cabinet and in consultation with representatives of civil society organizations in the cities of Zagreb, Osijek, Knin, Split and Cakovec. The goal of the consultations was to seek their feedback on the World Bank"s proposed strategy of assistance to the country.
The new strategy comprises four main objectives: to improve macroeconomic sustainability through more efficient public spending, together with strengthened budget management, to ensure sustainable private sector-led growth through enforcement of financial discipline and competitive conditions in the enterprise sector, to ensure broad participation in growth, and to introduce sustainable natural resource management through strengthening of environmental management capacity.