Croatia

   

Policy Performance

#36

Economic Policies

#40
Despite a restoration of economic growth, Croatia’s overall score for economic policies places it in the bottom ranks (rank 40) in international comparison. Its score on this measure has improved by 0.1 point since 2014.

After six years of recession, economic growth returned in 2016, with robust growth seen again in 2016. Tourism gains, recovery in the EU and falling oil prices all served as positive forces. Public debt levels are high, but deficits have been reduced to moderate levels. Little progress has been made with regard to economic reforms.

Unemployment rates have fallen substantially from very high levels. However, this is largely due to labor emigration. Active labor-market programs have been relatively effective, but were in large part suspended in 2016. Job creation is a weakness.

The VAT rate is extremely high, with tax evasion common. A newly passed taxation package will simplify personal and corporate income tax, and introduce a property tax. The rate of non-performing loans is dropping, and access to credit for SMEs has improved. The business sector relies on the government to fund R&D.

Social Policies

#34
With significant inclusion concerns, Croatia scores relatively poorly overall (rank 34) in the area of social policies. Its score on this measure has improved by 0.1 point relative to 2014.

The education system is inefficient, with outcomes lagging behind EU standards. A high-profile curriculum reform was derailed by politics, and vocational education programs are decoupled from market demands. Poverty and social exclusion are major problems. Some war-affected areas have not yet recovered economically.

The health care system is inclusive, but quality varies widely by region, and the system runs deficits. Co-payments are increasingly common. Maternity benefits are generous, but child-care coverage is limited. Labor-market discrimination against younger women and women with children is widespread.

Recent reforms have improved pension-system sustainability, but pensioner poverty rates are high. Reintegration of ethnic-Serbian returnees remains a problem. The influx of hundreds of thousands of refugees in 2015, most of whom planned to pass through Croatia, did not lead to racist incidents.

Environmental Policies

#20
With new programs in the early phases of implementation, Croatia receives middling overall scores (rank 20) with regard to environmental policies. Its score in this area has declined by 0.3 points relative to 2014.

The country’s environmental policy has been strongly shaped by EU accession. Waste management, water management and air quality are the most important issues. However, program implementation has been slow, and the EU has taken legal action against the country for failing to bring national laws on waste into conformity with EU rules.

The country supports U.N. environmental programs, and works closely with the European Union on related issues. It has reduced its emissions of greenhouse gases, with renewable sources accounting for a 20% share of energy consumption.

Democracy

#34

Quality of Democracy

#33
While electoral procedures are largely fair, Croatia receives comparatively low scores (rank 33) with regard to quality of democracy. Its overall score in this area has improved by 0.2 points relative to 2014.

New media-access laws remove private broadcasters’ obligation to cover campaigns, and allow public broadcasters to cover candidates more selectively. Recent campaign-finance laws have increased transparency, although monitoring remains weak. Public funding of parties has been reduced.

The Orešković government made extensive efforts to influence the media, and reduced funding for non-profit media. A new information commissioner has improved public information access. Civil rights are formally protected, but Roma and ethnic-Serbian citizens face discrimination. Domestic war-crimes prosecutions remain biased.

A judicial reform reduced the number of courts, but structural problems persist, and caseloads are too high. Many judges are not familiar with EU law. As a political deal, several politicians were appointed to the Constitutional Court, tarnishing its image. Anti-corruption efforts have been diminished by the annulment of verdicts against major political figures, and the return to politics of indicted actors.

Governance

#40

Executive Capacity

#39
With government and coalitions shifting repeatedly during the review period, Croatia falls into the bottom ranks internationally (rank 39) with respect to executive capacity. Its score in this area has declined by 0.2 points relative to its 2014 level.

While strategic-planning capacities have grown since EU accession, strategic units have limited influence on decision-making. A unit in the Prime Minister’s Office carries out policy coordination and monitoring, but has limited analytical capacities. Line ministries possess considerable autonomy in drafting proposals, while cabinet committees address interministerial conflicts.

EU accession has spurred RIA development, though assessment obligations are only selectively met.
Consultation with outside stakeholders has been limited. Informal coordination has tended to undermine rather than complement formal mechanisms. A proposal to reorganize the public-administrative structure was never implemented.

Conflicts within the Orešković governing coalition led to chaotic communication and ultimately the government’s breakdown. Thus, the government’s reform program was not implemented. This exposed the weak nature of incentives for ministerial compliance.

Executive Accountability

#36
With several notable weaknesses, Croatia falls into the bottom ranks (rank 36) with regard to executive accountability. Its score on this measure is unchanged relative to its 2014 level.

Citizens’ policy knowledge is on average comparatively limited. While most media are focused on entertainment, a few newspapers do provide good coverage of political and economic affairs. Independent, objective broadcasters are capturing market share from the partisan public broadcaster.

Parliamentarians have limited resources. Formal oversight powers are sufficient, with a conflict-of-interest body proving particularly effective. The Audit Office is independent with a wide-ranging scope of activity, but the government tends to react slowly to Ombudsman requests.

Political parties are dominated by their leadership ranks. Economic-interest organizations are influential, but most have lacked the will or capacity to develop their own proposals. A number of other interest organizations have sophisticated policy-development capabilities.
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