ZAGREB, Nov 23 (Hina) - The European Bank for Reconstruction and +Development's (EBRD) report on the situation in transition +economies in former communist countries published on Monday in +London assessed Croatia as a country which
has marked significant +progress towards realising a market system but which still required +to implement a series of reforms particularly in its banking and +pensions systems and its railways.+ The downfall of the fifth largest bank in Croatia - the "Dubrovačka +banka" - which was quickly rehabilitated by the central bank has +highlighted structural problems in the banking sector, notes the +ERBD's report.+ The report continues to state that many banks do not have sufficient +reserves, supervision over banks is minimal and is not applied +appropriately. + The new banking law which will increase the central bank's +authority went through its first reading in the Croatian National +Sab
ZAGREB, Nov 23 (Hina) - The European Bank for Reconstruction and
Development's (EBRD) report on the situation in transition
economies in former communist countries published on Monday in
London assessed Croatia as a country which has marked significant
progress towards realising a market system but which still required
to implement a series of reforms particularly in its banking and
pensions systems and its railways.
The downfall of the fifth largest bank in Croatia - the "Dubrovačka
banka" - which was quickly rehabilitated by the central bank has
highlighted structural problems in the banking sector, notes the
ERBD's report.
The report continues to state that many banks do not have sufficient
reserves, supervision over banks is minimal and is not applied
appropriately.
The new banking law which will increase the central bank's
authority went through its first reading in the Croatian National
Sabor mid-year. The key challenge though is the privatisation of
the four rehabilitated banks.
EBRD experts consider that pension reforms are vital which as they
are now, represent a heavy burden for the future. There are
currently 1.3 million registered employees in Croatia and 900,000
pensioners. This is the result of an unfavourable demographic
trend, low pension age and liberal politics towards early
retirement. State expenditure for pension allowances has increased
from 9 per cent of the Gross Domestic Product in 1994 to 13 per cent
last year.
Restructure of Croatian Railways is underway and the new law on this
public company should take effect early next year.
Reform programmes were developed in cooperation with the World Bank
and EBRD and foresees a decrease in employment, closure of
unprofitable lines and the privatisation of support industries,
notes the EBRD.
EBRD considers that despite the fact that productivity in Croatia
is increasing, company administration is quite poor. The
restructuring of companies is far too slow mostly due to the lack of
majority shareholders and of the high level of state ownership.
The report further notes that Croatia has made considerable
progress towards accession to the World Trade Organisation (WTO)
and this is expected to be realised next year.
It is expected that Croatia will then be accepted to the Central
European Free Trade Association (CEFTA).
Croatia is continuing to open its finance sector to foreign
competition in keeping with WTO recommendations and is prepared for
further liberalisation concludes the EBRD report.
(hina) sp