The analysis "Government Subsidies in the EU and Croatia" was presented in Zagreb last week at a round-table discussion organised by the Institute for Public Finance and the Friedrich Ebert Foundation as part of the project "Croatia's EU Accession: Challenges of Economic and Legal Adjustment."
In the 2001-2004 period, government subsidies in Croatia amounted to around 8 billion kuna annually, or around 4.4 per cent of Gross Domestic Product, said Ivana Jovic, a co-author of the analysis.
Excluding rail subsidies, government subsidies in that period totalled 3.6 per cent of GDP, and excluding subsidies for transport, agriculture and fisheries, 1.8 per cent of GDP. At the same time, government subsidies in the EU, excluding railways, were 0.58 per cent of GDP, and excluding transport, agriculture and fisheries, 0.42 per cent of GDP.
In Croatia, sector subsidies account for 56.1 per cent of overall subsidies, as against 23 per cent in the EU. On the other hand, the EU spends 52.2 per cent of funds on horizontal subsidies, while Croatia spends only 17.2 per cent for that purpose.
Jovic said that government subsidies for transport (mainly for the Croatian Railways (HZ) company), shipbuilding, ironworks, and company restructuring amounted to nearly 80 per cent of all subsidies.
It was said that most of those subsidies were banned in the EU because of their negative impact on competition.