CROATIA POST ACCESSION AND STRUCTURAL AND COHESION FUNDS

Croatia is set for EU entry on 1st July 2013. Is the Croatian administration and the private sector prepared for abosrbing the EU structural and cohesion funds (SCF) that it will gain access to after accession?

The Croatian economy has had a rough ride since 2008. Croatia experienced negative GDP growth in 2012, alongside falling levels of Foreign Direct Investment, and has recently had its credit rating downgraded to 'junk' status by Standard & Poor's (S&P). EU structural and cohesion funds are widely hailed as the last straw to grasp if any recovery of economic activity is to happen in 2013. Apart from improving cohesion and integration into the EU's economic and political system, the funds will also play a crucial role in the current center-left government's recovery plan as the only certain external financial factor in the year to come.

There is no question that EU funds (SCF) in particular represent an opportunity provided they are approached and managed in the right way by the Croatian government.

Conditions for success

Strong leadership and experience in the field of regional development is the key to the use of EU funds successfully. Croatia's current government is on the right track as far as its strategy for EU funding management goes. But good leadership does not guarantee success in absorbing EU structural funding as factors like administrative hurdles, bureaucratic topidity, corruption and lack of applicant experience in EU funding tenders stand in the way. These factors can undermine the benefits to be acquired from EU funds. Also important is having access to information, getting the target beneficiaries of EU funds motivated as well as having administrative capacity and experience in dealing with the EU institutions.

Since 2007, the EU has made available a total of € 998 million in financial support to Croatia under pre-accession assistance (IPA). All these funds have now been allocated. After EU accession, Croatia will have at its disposal the Cohesion and Structural Funds for the use of which Croatia has started to prepare by using pre-accession funds.

In the second half of 2013, the total EU funds approved for Croatia amount to € 687.5 million. The most of this comes from the Structural and Cohesion Fund (€ 449.4 million) and European Fisheries Fund (€ 8.7 million).

According to a draft multinannual financial ramework for the period 2014-2020 the total funds earmarked for Croatia amount to € 13.7 billion.