"Croatia is experiencing excessive macroeconomic imbalances, which require decisive policy action and specific monitoring. The Commission will take in May, on the basis of the National Reform Programmes (NRPs) and other commitments to structural reforms announced by that date, the decision to activate the Excessive Imbalance Procedure (EIP). In a context of subdued growth, delayed restructuring of firms and dismal performance of employment, risks related to weak competitiveness, large external liabilities and rising public debt coupled with weak public sector governance, have significantly increased," the Commission stated on Wednesday.
Croatia is one of 16 countries identified in November as experiencing macroeconomic imbalances.
The EC sets out different stages of imbalances.
The first stage includes countries that are free of imbalances.
The second stage encompasses countries that are experiencing imbalances that require monitoring and political action.
The third stage consists of countries stricken by imbalances that require monitoring and decisive political action.
The next, fourth stage is for countries with imbalances which require decisive policy action and specific monitoring.
The fifth stage is for excessive imbalances, which require decisive policy action and specific monitoring.
The last, sixth stage is for countries with excessive imbalances that must be addressed by decisive political action and are to activate Excessive Imbalances Procedure.
Croatia is put into the stage 5. with a possibility to be moved into stage 6 and a decision on the activation of the Excessive Imbalance Procedure will be taken in May after assessment of the National Reform Programme (NRP) and other relevant documents.
"In March, the Commission will organise another round of bilateral meetings with the Member States to provide an opportunity to discuss the Country Reports. By mid-April, the Member States are expected to present their National Reform Programmes and their Stability or Convergence Programmes. Based on all these sources, the Commission will present a new, focussed set of Country Specific Recommendations for 2015-2016 in May, targeting the most important priorities to be tackled," the EC said on its web site.
The procedure for macroeconomic imbalances has preventive and corrective dimensions.