Publication: Macroeconomic Stability, Fiscal Policy and Taxation: National Development Strategy Croatia 2030 Policy Note
Loading...
Date
2019-07
ISSN
Published
2019-07
Author(s)
Editor(s)
Abstract
Croatia has made significant economic progress since independence, but the global financial crisis has exposed weaknesses in its economy and growth model. While growth has resumed in 2015, income convergence has been thrown back by the crisis and by the prolonged recession that followed and is currently proceeding only slowly. Low growth potential, deriving from low productivity growth, an ageing society, emigration, and a pace of capital accumulation lower than before the crisis, needs to be boosted for sustainable and reasonably rapid income convergence with the EU28. To this end, the export sector merits particular attention. Integration in global value chains and exposure to international competition would help to strengthen firm-level productivity, investment, and wages. Croatia has the smallest goods export sector among its peers in Central and Eastern Europe (CEE), and while exports of services are strong thanks to a vibrant tourism industry, the potential for productivity improvements there is limited. Fiscal policy will need to remain tight, as high public debt, to a significant extent denominated in foreign currency, needs to be reduced and fiscal space rebuilt. However, there is scope for using expenditure policies, for instance better targeting of social assistance, to increase incentives for labor force participation, which would help counter adverse demographic trends, reduce the need for fiscal transfers and increase the scope for raising public investment, and reduce inequality and poverty. Lastly, the effectiveness and efficiency of public sector service delivery across almost the entire public sector will need to be raised. This will also serve to make Croatia a more attractive destination for investments, which in turn would help boost output, reduce unemployment, and provide more revenue.
Link to Data Set
Citation
“World Bank. 2019. Macroeconomic Stability, Fiscal Policy and Taxation: National Development Strategy Croatia 2030 Policy Note. © World Bank. http://hdl.handle.net/10986/36560 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Indonesia Development Policy Report : Beyond Macroeconomic Stability(Washington, DC, 2003-12-04)The year 2004 will mark another crucial step in Indonesia's long-term transition. The country will go to the polls to elect new national and regional Parliaments, and for the first time in the history o f the Republic, to directly elect a President. This milestone in the country's democratization is accompanied by one in economic policy: for the first time since the onset o f the crisis, the Government will not have a program supported by the IMF. The Government's decision to graduate from its IMF program is warranted by the strong improvements in the country's macroeconomic conditions, and has been broadly welcomed by the markets and the international community. The Government's "Economic Policy Package Pre and Post IMF" or White Paper, issued as a presidential instruction on September 15th has helped build confidence in the Government's policies in the election year ahead. The policy package is intended to "bridge the credibility gap." The White Paper is a unique document: it is the first time that the Government commits itself transparently to a time-bound action plan to implement policies. The document shows continuity in macroeconomic policies and financial sector reforms, but also proposes a set of specific policy and institutional measures to address issues that have undermined the country's investment climate. While the timetable for adopting these measures is a short term one - fifteen months - many o f the proposed measures address fundamental longer term problems, and some will take several years to see through fully. The private sector, which has a high " stake in the measures included in the paper, has emerged as an independent monitor of progress. Since the White Paper is so central to Indonesia in the year ahead, much of this brief is devoted to discussing it. Beyond recent developments, the report discusses and analyzes critical policy actions from the White Paper. The report also points at the White Paper measures that may not necessarily be in line with the stated goals of the document. And finally, the report identifies policies that are needed beyond the White Paper to ensure Indonesia builds on the macroeconomic stability achieved to attain more rapid growth and poverty reduction.Publication Croatia Public Finance Review : Restructuring Spending for Stability and Growth(2014-10-01)The Croatia poverty rate, as measured by the international line of moderate poverty at dollar 5 in public-private partnership (PPP) terms, is estimated at 2.8 percent for 2012. The share of the population at risk of poverty, based on a higher national and relative poverty line, also declined substantially prior to the 2008 global financial crisis, although has subsequently increased markedly. The global financial crisis, with the loss of credit, has exposed Croatia's macroeconomic vulnerabilities. This report shows that without addressing macroeconomic weaknesses, through sustained fiscal adjustment and institutional reforms, Croatia will not be able to reignite higher growth and benefit fully from European Union (EU) membership, and the quest for future prosperity may prove elusive. Similarly, without accelerating structural reforms, especially in the area of labor market, investment climate, and public sector efficiency, Croatia will face further stifled competitiveness and any prospects for recovery of growth and jobs. Focusing on the fiscal and public sector related deficiencies, this report systematically analyzes three interrelated issues to assist the Croatian government in informing public policy, strengthening macroeconomic stability, and laying the foundation for a robust recovery: first, it analyzes Croatia's major fiscal weaknesses, risks, and alternative fiscal scenarios, and on that basis, calculates the required fiscal adjustment needed over the medium term. Second, it analyzes the institutional weaknesses and requirements for the efficient use of EU funds in the coming years. Third, the report analyzes the structure of Croatia's public finances and provides a blueprint of the fiscal adjustment of around 5 percentage points of gross domestic product (GDP) over the medium term.Publication Turkey - Country Economic Memorandum : Towards Macroeconomic Stability and Sustained Growth, Volume 2. Main Report(Washington, DC, 2003-07-28)This report addresses key questions facing Turkish policymakers: how to sustain the economic recovery that began in 2002 following the deep crisis of 2001, how to ensure disinflation and public debt sustainability, and how to foster broad-based and equitably distributed growth in the future. After a brief review of the 2001 crisis and the Government response, the report analyzes the economic opportunities and challenges facing Turkey, and identifies policies to build on the economic recovery which began in 2002. The CEM develops a comprehensive four-point agenda for sustainable and more equitably distributed growth. The agenda encompasses: (i) macroeconomic stability, (ii) effective government, (iii) improved business environment, and (iv) stronger social policies. The report closes with medium-term macroeconomic projections to illustrate Turkey's prospects under a scenario of sustained reform and to highlight the risks to growth and macroeconomic stability should the economic program go off track.Publication Stabilizing Intergovernmental Transfers in Latin America : A Complement to National/Subnational Fiscal Rules?(World Bank, Washington, DC, 2002-07)The traditional theory of fiscal federalism assigns the role of macroeconomic stabilization to the federal government. In addition to this long-standing theoretical result, there is empirical observation that federal governments in developing countries typically have cheaper and more stable access to capital markets, relative to subnational governments. Drawing on the recent experience of four large federal countries in Latin America-Argentina, Brazil, Colombia, and Mexico--the authors examine how intergovernmental transfers affect the division of the burden of stabilization across the levels of government, when the nation as a whole faces economic fluctuations. Imposing stabilizing rules on federal transfers that protect subnational governments from fluctuations in the business cycle can serve two purposes. During boom periods, stabilizing rules prevent subnational governments' tendency to increase inflexible expenditures. And during downturns, stabilizing rules place the burden of borrowing at the federal level-the level most appropriate for macroeconomic stabilization and often the level with superior access to credit. Despite the logic of these rules, recent experience of the four countries reveals that these rules can be risky, particularly in the face of high GDP volatility. Protection against falling revenues in the downturn constitutes a contingent liability for the central government. Argentina's stabilizing rule contributed to fiscal and political tensions during its ongoing crisis. Colombia is beginning to implement similar rules. Meanwhile, Brazilian and Mexican transfers do not implement such rules and fiscal and economic results do not appear to have fared any worse for this absence. The authors draw on the country experience to establish that certain conditions should be in place before establishing a stabilization rule to federal-to-subnational fiscal transfers-in particular the elimination of long-term structural fiscal imbalances, either within levels of government or across levels of government.Publication Brazil - Poverty Reduction, Growth, and Fiscal Stability in the State of Ceara : A State Economic Memorandum, Volume 2. Annexes(Washington, DC, 2000-08-21)Although the State of Ceara, in Brazil, is a model of good economic, and fiscal performance given its poverty status, recent analysis show poverty remains severe, in spite of significant reductions over the last decade. The combination of good governance, and sound fiscal management, industrial promotion, and public investments have been successful, but the report questions whether different policies, could have led to higher growth, and poverty reduction, or, whether it is simply a matter of time to further reduce poverty rates. Arguably, Ceara can continue to develop economically, based on favorable assets, such as agriculture, or tourism, on a large labor force with wages comparatively low by Brazilian standards, and on fiscal responsibility. But development is constrained by low productivity, low education levels, and by large populations living in stagnant regions, where water accessibility is limited. While alternatives either suggest to: strengthen the existing policy on industry development; focus on massive public investments, namely education, and infrastructure; or, exercise an explicit welfare strategy, recommendations stipulate improvements in education, development of public-private partnerships, removal of industrial incentives through reform policies, implementation of institutional framework for water resource management, and, overall social safety nets to reduce poverty.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.