Research :: Finished research :: 2001-2005
Strategy for reducing state aid to enterprises in Croatia


Project manager: Marina Kesner-Škreb, Institute of Public Finance

Researchers: Ivona Sabol, Ministry of Finance of RC
  Silvija Vresk, Ministry of Finance of RC
  Ivana JoviŠ, Prvredna banka Zagreb

In the light of the preparations of Croatia to join the EU, the policy concerning state aid allocated to enterprises will have to be re-examined. It was agreed in the 2005-2007 pre-accession economic programme of the Government of the Republic of Croatia that the state aid policy had to be harmonised with that in the EU: i.e., that the amount of state aid in Croatia had to be reduced and re-channelled to horizontal targets.

According to research carried out in the Institute of Public Finance it was established that the volume of state aid in Croatia was large and was to a great extent targeted to certain sectors of the economy, to shipbuilding, tourism and transportation. As well as direct subsidies from the budget, a number of indirect forms of state aid were used – tax relief, soft loans, government guarantees, tax deferrals and the like.

Future state aid policy in Croatia will have to follow EU recommendations. For this reason it is appropriate to see into which sectors and enterprises today the government is investing its resources, and to propose a strategy to reduce and redirect aid in the coming period. As well as the reduction and retargeting of state aid, it is just as important for the state policy to include an increase of transparency in the system of allocation and control of state aid. In recent times, the EU has developed methods for the ex ante and ex post monitoring of the efficiency of aid and this no less important aspect should become a component part of future Croatian aid policy.

The objective of the research is to propose a strategy for reducing state aid to enterprises in Croatia.

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