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Croatia
>> Regional Overview >> Croatia Overview Activity Data Sheet
PROGRAM: Croatia
TITLE & NUMBER: Growth of a Dynamic and Competitive Private Sector, 160-013
STATUS: New
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $15,300,000 AEEB
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $16,800,000 AEEB
INITIAL OBLIGATION: FY 2001 ESTIMATED COMPLETION DATE: FY 2006Summary: USAID's objective is to improve the overall enabling environment for economic growth and private sector development by supporting the Government of Croatia's (GOC) efforts to undertake necessary macroeconomic and structural reforms. The privatization process will be accelerated in order to move those productive assets remaining in state hands into the private sector, and to stop the wasteful flow of scarce public resources into unproductive enterprises. At the same time, these businesses will acquire the skills, tools and services they need to compete in increasingly competitive local, regional and global markets. The program will concentrate on sectors where Croatia is most likely to be competitive (e.g. tourism, agricultural processing and information technology).
Program Categories include banking reform, commercial law reform, energy restructuring and privatization, fiscal reform, micro, small and medium enterprise technical assistance, pension reform, privatization, enterprise restructuring and trade and investment regimes.
Key Results: In the near term, the USAID Mission expects to make progress toward the following key results: (1) Competitive, Transparent Privatization of State-Owned Enterprises; (2) Strengthened Capacity of Small and Medium Enterprises to Operate and Compete; and (3) Improved Investment Climate.
Performance and Prospects: Prior to the changes that occurred in the Croatian Government in early 2000, USAID assistance focused almost exclusively on the return and reintegration of war-affected populations and democracy building. Although several short-term activities to promote economic reform began in the last six months of 2000, the portfolio of new longer-term interventions will begin in 2001.
In the financial sector, bank supervision assistance to the National Bank of Croatia (NBC) was recently reactivated after being frozen in 1997 due to the United States Government's (USG) concern over political issues under the prior regime. The program made some progress toward increasing the capacity of the National Bank of Croatia to supervise individual commercial banks based on risk. With USAID assistance, the legal and regulatory framework has been improved, providing the central bank with adequate authority to enforce prudential laws and regulations. In addition, the on- and off-site supervision capacity of National Bank staff was strengthened through intensive training to provide oversight of the commercial banking sector. In FY 2001, USAID proposes to obligate $0.5 million to continue assisting the National Bank of Croatia in the area of bank supervision.
USAID's assistance to the Croatian Privatization Fund will seek to build the institutional capacity of the Fund to carry out the GOC's plans for an aggressive program to sell State-owned enterprises in a fully transparent and competitive manner. Technical assistance will focus on marketing and planning, valuation, ethics policy design and implementation, and accounting and information systems. Results of this assistance will include timely divestiture of state assets and increased integrity of the privatization process. In FY 2001, USAID proposes to obligate $3.5 million for assistance to the Croatian Privatization Fund.
Beginning in FY 2000, USAID has provided a full-time resident economic policy advisor to the Deputy Prime Minister. This advisor provides the Deputy Prime Minister with market-oriented counsel on a wide range of economic policy matters and facilitates closer communications among the Deputy Prime Minister, the Embassy and the Mission on economic issues. In FY 2001, USAID proposes to obligate $0.75 million in continued financing for this advisor to the Deputy Prime Minister, and for specialized short-term technical assistance to the Deputy Prime Minister as needed.
USAID provides technical assistance to the Ministry of Finance's fiscal reform program in the areas of integrated financial management and fiscal decentralization. USAID support was key to the Ministry's success in implementation of the new automated integrated financial management system on January 1 of this year in order to meet the International Monetary Fund (IMF) conditionality for a standby loan facility. USAID also will support fiscal decentralization linked to expected legislation on local self-government and local government finance. In FY 2001, USAID proposes to obligate $2.3 million in assistance for fiscal reform.
USAID has already provided short-term assistance aimed at improving operations in the court-based land registry of Zagreb, and has offered advice on establishing a collateral registry. Longer-term USAID assistance in commercial law reform is being designed collaboratively with the World Bank, and is expected to focus on land and company registries, establishment of a centralized collateral registry, alternative dispute resolution and improvement of caseload management and court administrative systems in the commercial courts. In FY 2001, USAID proposes to obligate $3 million to support commercial law reform.
Although Croatia has many businesses with fewer than ten employees, it lacks a robust group of slightly larger firms employing 10-200 people. USAID will strengthen indigenous capacity to provide business-consulting services and work with business groups to develop competitive strategies. By fostering public-private dialogue the program hopes to improve the overall competitiveness of Croatian business, with special emphasis on tourism, information technology and agribusiness, through policy change and other measures to boost productivity and innovation. In FY 2001, USAID proposes to obligate $3.7 million for Small and Medium Enterprise (SME) and competitiveness.
USAID has begun working with the Ministry of Economy and the national electric power utility to analyze issues related to the legal unbundling, restructuring, and eventual privatization of the utility. USAID will assist with the creation and start-up of an independent regulatory agency and the development of new structures and rules needed to establish a fully competitive power market. In FY 2001, USAID proposes to obligate $0.4 million for assistance to the regional energy program. In FY 2001, USAID proposes to obligate $1.1 million for a training program to support the activities described above.
In FY 2002, the Privatization and Commercial Law activities, and the economic reform advisors will continue. The new business services project will just be underway.
Beneficiaries: Through direct support to improving fiscal responsibility within the Ministry of Finance, the GOC will be better able to control government spending and therefore direct resources more appropriately to meet the needs of the public in general. Programs underway within the courts to improve efficiency of the operations of the Commercial Courts will result in cases reaching resolution within an expeditious time frame that is consistent with western legal standards. Consequently, creditors will feel more secure lending money knowing that should a borrower fail to repay, satisfaction through the courts will be a reliable alternative. Additional beneficiaries include the users of the land, company and soon to be established, collateral registries. Programs are in place to improve the operations of these registries so users can perform registration actions transparently, with known costs and within a predictable time frame. The final beneficiaries are the Croatian small and medium enterprises (SME). Through a program of enhancing the products and tools of Croatian business services providers, and creating a wholesale network of high quality, internationally recognized business services, the availability of premium consulting services will increase along with a drop in the cost to SMEs. SMEs will have services available that to date were purchased at extremely high costs from advanced market economies. Access to the European market is expected to increase and therefore, exports and GDP should show a marked rise.
Possible Adjustments to Plans: Since the design of several of the major components of this program are still in the early stages, there may be adjustments among the program categories. Based on findings in the design process, there may be shifts in emphasis among the components before procurement. In addition, as it monitors the performance of various components, USAID may shift resources toward those program areas that are producing the best results.
Other Donor Programs: USAID will support and build on the conditionality of its international development partners -- especially the World Bank and the IMF-- along with the requirements of European Union (EU) accession, to keep Croatia on the path to economic reform. The World Bank is planning major programs in the areas of commercial law, land registry /cadastre, and pension reform, all of which complement USAID programs. Croatia is expected to execute an Association and Stabilization Agreement with the European Union in mid-2001, which will bring substantial new donor resources. The exact nature of future EU programs remains unclear.
Principal Contractors, Grantees, or Agencies: The implementing entities for many of the activities are yet to be determined. Current implementers include KPMG Consulting, Booz-Allen and Hamilton, and the Carana Corporation.
Selected Performance Measures: This is a recently approved objective within the new USAID five-year strategic plan for Croatia. The performance monitoring plan is currently under development.
U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 0 DA 0 DA 0 CSD 0 CSD 0 ESF 0 ESF 310 SEED 30 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 310 SEED 30 SEED 280 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 6,659 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 0 ESF 15,300 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 0 DA 0 CSD 0 ESF 21,959 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 16,800 SEED 0 SEED 39,069 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
Obligations Expenditures Unliquidated Through September 30, 1999 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 0 DA 0 DA 0 CSD 0 CSD 0 ESF 0 ESF 4,050 SEED 30 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 4,050 SEED 30 SEED 4,020 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 776 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 0 DA 0 CSD 0 ESF 776 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 4,826 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
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Last Updated on: May 29, 2002 |
