ECONOMY IN 1997 AND 1998
Owing to a comprehensive stabilisation programme launched in October 1993, Croatia has become one of the leading transition countries in terms of macroeconomic and political stability, which enables her to achieve stable economic growth and to join global economic integration processes. In spite of all the hardships suffered recently, a legal framework modelled after Western European countries has been established, thus promoting the development of free entrepreneurship and a market economy.
Government expenditure has been adjusted to peacetime requirements, and the share of public consumption in GDP is decreasing to 44%.
The domestic currency exchange rate has remained stable for four years in a row, and foreign exchange reserves at the National Bank of Croatia amounted to 2.538 billion USD at the end of 1997. Relations with the creditors from the Paris and London Club have been resolved successfully, thus enabling the entry of Croatian bonds on the global capital market. Due to a favourable credit rating (BBB) Croatia has obtained more favourable borrowing conditions and better references for foreign investors. The shares of PLIVA, the largest Croatian pharmaceutical company, and the “ZagrebaËka” Bank are already listed on the world stock exchanges. Inflation has been maintained at a rate of approximately 3.5% throughout the last couple of years, and the budget deficit is lower than 1%. Croatia’s economic indicators are congruent with the parameters defined in the Maastricht Treaty, which ranks her among potential EU members.
The process of restructuring of economic entities is being carried out successfully. Most small and medium-sized enterprises have already been privatised, and the privatisation of the public sector is about to begin. Voucher privatisation will help to complete the privatisation process before too long, and the process of restructuring of the banking system is to be completed soon.
The priority task in the forthcoming period is an increase in production and exports for the purpose of securing stable economic growth. Following a successful reintegration of the occupied territories, most of our endeavours have to be dedicated to the revival of production and the reconstruction of infrastructure and housing units in the war-affected regions. Therefore an increase in FDI from 13% to at least 25% of GDP is of greatest importance.
One of the top priorities in economic policy is the finalisation of negotiations on Croatia’s accession to the World Trade Organisation, CEFTA and subsequently the European Union. Croatia is an open country from the economic point of view, and its trade system is almost completely liberalised. The European Union participates in Croatia’s commodity exchange with a share of 60% and CEFTA countries with 17%, which proves that we have achieved all the necessary macroeconomic conditions for joining these associations.