1. Improving sustainability of revenue enhancing policy as indicated by:
Improved tax gap as a percentage of total GDP
Baseline: 0.8 (2011)
Target: 0.9 (2013)
ERDPL 2 (delivered 2014)
RAMP (delivered 2015)
Potential DPL
Macro-Fiscal Structural Dialogue
Regular Economic Report (programmatic 2014-2016)
2. Improving the targeting of social assistance programs as indicated by:
Means-tested programs as a share of all social assistance programs increased
Baseline: 16% (2012)
Target: 20% (2017)
ERDPL2 (delivered 2014)
Social Protection System Modernization Project (approved in FY15)
Potential DPL
Activation TA (regional, delivered 2015)
PFR and NRP TA (delivered 2014-2015)
Spending Review advisory (delivered 2015)
Regular Economic Report (programmatic 2014-2016
3. Introducing cost rationalization and efficiency measures in the health sector as indicated by:
Total public accrual health spending reduced by .5 percent of GDP between 2012 and 2017.
Further rationalization and reorganization of hospital system--: total number of acute care beds
Baseline 15,930 (2012)
Target:12,800 (2017)
ERDPL 2 (delivered 2014)
Development of Emergency Medical Services and Investment Planning
Health PforR (approved 2014)
PFR and Spending Review (delivered 2014-2015)
Potential DPL
Spending Review advisory (delivered 2015)
Regular Economic Report (programmatic 2014-2016)
4. Contributing to the coherence and implementation of strategic plans in railway and improvements in airport infrastructure as indicated by:
Implementation of restructuring plans for railway sector companies and medium-term strategy for the rail sector consistent with the EU 2014-20 funding period
Baseline:
Revised restructuring plans of railway companies
Target:
Railway Modal Strategy 2014-2020 and medium term contracts in place for Passenger Services and Infrastructure Management consistent with the strategy
Accommodate existing and future air traffic
Baseline: 0.44 million unique users in 2013
Target: 0.60 million unique users in 2017
Railway Policy Note (delivered 2013)
Croatia Energy Sector Review (delivered 2014)
Railway Lending (approved 2015)
Energy Vulnerability Note (delivered 2016)
Partners:
EBRD
EC
IFC financing for Zagreb Airport expansion and modernization
Pillar II Innovation and Trade Competitiveness for Growth and Shared Prosperity
5. Improving efficiency and reducing arrears in the judicial system as indicated by:
Case backlog in judiciary decreased
Baseline: 437,892 (2012)
Target: 394,103 (2017)
Integrated Land Administration System project (closing in April 2017)
Justice Sector Support project (closing in June 2016)
ERDPL2 (delivered 2014)
Justice Sector Public Expenditure and Institutional Review (delivered 2015)
Croatia: A Chronicle of Selected Justice Reforms (delivered 2015)
Potential DPL
Partners:
EC
6. Contributing to diversity and security of energy supply by financing energy efficiency and renewable energy projects as indicated
Additional renewable energy generation capacity installed
Target: 108 MW (2017)
GHG emissions avoided per year
Target: 75,000 tCO2 equivalent (2017)
IFC financing for three new Wind Power Plants (Sibenik, Jelinak, Rudine)
IFC financing to export oriented companies, SMEs, private sector infrastructure investments, FDIs and regional initiatives
IFC investments in financial intermediaries for on-lending to SMEs (SocGen Croatia)
EPARIS9
Partners:
EIB
CEB
KfW
Pillar III. Helping Maximize the Economic Benefits of Becoming an EU Member State
8. Improving coherence and credibility of national strategic and policy documents needed for the EU funds absorption and management as indicated by:
National strategic and policy documents, including sector specific strategies, needed for the use of EU Funds, adopted by relevant authorities
Baseline: no documents in place (2012) Target Sector strategies adopted: (i) National Education, Science and Technology Strategy; (ii) National Innovation Strategy;
(iii) Research and Innovation Strategy for Smart Specialization; (iv) Policy advice/recommendations in the areas of irrigation, rural development, transport, SME and water/environment sector; (v) National Technical and Economic Study for Management of Wastewater Treatment Sludge (2017)
EU Preparedness TA ( programmatic 2014-2016)
Public Finance Review (delivered 2014)
Integrated Land Administration System (closing in April 2017)
EU Water sector compliance Project - dropped
NRP TA (delivered 2015)
RAS Spatial Analysis of Poverty and Policies (approved 2016)
Partners
EC
9. Contributing to Croatia’s readiness and capacity to build the project pipeline for absorbing EU Fundsin selected sectors as indicated by:
Number and value of project applications prepared and/or submitted for financing from EU Funds in research and innovation and nature protection
Baseline: no project proposals (2012)
Target: (i) At least 6 project applications for financing in research, development and innovation sector, for the total value of projects amounting to € 50 million;
(ii) At least 25 project applications for financing in the nature protection sector, for the total value of projects amounting to € 50 million (2017)
EU Preparedness TA (programmatic 2014-2016)
EU Natura 2000 Integration (closing in April 2017)
Second Science and Technology Project (closing in June 2017)
Entire WB portfolio
Smart Specialization in Croatia – Inputs from Trade, Innovation and Productivity Analyses
Partners
EC
Annex 2: Matrix of changes to original CPS Results Matrix
Pillar I: Fiscal Adjustment through Reforms at the Sector Level
CPS Objectives and Indicators
Revised CPS Objectives and Indicators
1. Improving sustainability of revenue enhancing policy as indicated by:
Improved tax gap as a percentage of total GDP
Baseline: 2.7% (2012)
Target: 2.0% (2017)
Improving sustainability of revenue enhancing policy as indicated by:
Improved tax gap as a percentage of total GDP
Baseline: 0.8 (2011)
Target: 0.9 (2013)
New Source: IOTA data
2. Improving the targeting of social assistance programs as indicated by:
Means-tested programs as a share of all social assistance programs increased
Baseline: 16% (2012)
Target: 20% (2017)
No change
3. Introducing cost rationalization measures in the health sector as indicated by:
Total public accrual health spending reduced
Baseline: 6.6% (preliminary, 2012)
Target 6.1 % (2017)
Further rationalization and reorganization of hospital system
Baseline: 6 beds used for hospital admissions per 1000 inhabitants (2012)
Target:5 beds used for hospital admissions per 1000 (2017)
Introducing cost rationalization and efficiency measures in the health sector as indicated by:
Total public accrual health spending reduced by .5 percent of GDP between 2012 and 2017.
Note: the indicator remains unchanged. The change simply avoids the link to the earlier baseline that was revised.
Updated indicator to be consistent with Health Sector Project Disbursement Linked Indicator
Further rationalization and reorganization of hospital system--: total number of acute care beds
Baseline 15,930 (2012)
Target:12,800 (2017)
4. Contributing to the coherence and implementation of strategic plans in railway sector as indicated by:
Implementation of restructuring plans for railway sector companies and medium-term strategy for the rail sector consistent with the EU 2014-20 funding period
Baseline:
Revised restructuring plans of railway companies
Target:
Railway Modal Strategy 2014-2020 and medium term contracts in place for Passenger Services and Infrastructure Management consistent with the strategy
Pillar II Innovation and Trade Competitiveness for Growth and Shared Prosperity
4. Contributing to the coherence and implementation of strategic plans in railway and energy sectors and improvements in airport infrastructure as indicated by:
Implementation of restructuring plans for railway sector companies and medium-term strategy for the rail sector consistent with the EU 2014-20 funding period
Implementation of Croatia Energy Strategy 2009-20 related to the renewable energy and district heating
Baseline:
Revised restructuring plans of railway companies
Energy Strategy in place (2012)
Target:
Railway Modal Strategy 2014-2020 and medium term contracts in place for Passenger Services and Infrastructure Management consistent with the strategy
Action plan adopted for feed-in tariffs for renewable energy resources and for improving the efficiency of the district heating sector.
Accommodate existing and future air traffic
Baseline: 0.44 million unique users in 2013
Target: 0.60 million unique users in 2017
Moved to Pillar I (see above)
IFC added new indicator - unique users supported
5. Improving efficiency and reducing arrears in the judicial system as indicated by:
Case backlog in judiciary decreased
Baseline: 498,601 (2012)
Target: 300,000 (2017)
The baseline and target numbers were not correct and were adjusted to reflect the number in the project document.
Baseline: 437,892 (2012)
Target: 394,103 (2017)
6. Contributing to diversity and security of energy supply by financing energy efficiency and renewable energy projects as indicated by:
Additional renewable energy generation capacity installed
Target: 108 MW (2017)
GHG emissions avoided per year
Target: 75,000 tCO2 equivalent (2017)
Revised: The baseline number was not correct. Revised target showing additional renewable energy capacity installed through IFC investments.
Revised: IFC has revised its GHG emission target in Croatia because its $75 million in the PBZ bank, with a focus on renewable energy, was not disbursed.
7. Supporting competitive local companies to expand in the region and increase exports as indicated by:
Level of exports of beneficiary companies
Baseline: HRK 4.35 billion (2011)
Target: At least preserve the level of exports (2017)
Number of outstanding MSME loans in the portfolio IFC’s client banks
Baseline: 6,000 (2011)
Target: At least preserve the same level (2016)
IFC added new indicator – MSME loans through financial institutions
Pillar III. Helping Maximize the Economic Benefits of Becoming an EU Member State
8. Improving coherence and credibility of national strategic and policy documents needed for the EU funds absorption and management as indicated by:
National strategic and policy documents, including sector specific strategies, needed for the use of EU Funds, adopted by relevant authorities
Baseline: no documents in place (2012) Target Sector strategies adopted: (i) National Education, Science and Technology Strategy; (ii) National Innovation Strategy;
(iii) Research and Innovation Strategy for Smart Specialization; (iv) Policy advice/recommendations in the areas of irrigation, rural development, transport, SME and water/environment sector; (v) National Technical and Economic Study for Management of Wastewater Treatment Sludge (2017)
No change
9. Contributing to Croatia’s readiness and capacity to build the project pipeline for absorbing EU Fundsin selected sectors as indicated by:
Number and value of project applications prepared and/or submitted for financing from EU Funds in research and innovation and nature protection
Baseline: no project proposals (2012)
Target: (i) At least 6 project applications for financing in research, development and innovation sector, for the total value of projects amounting to € 50 million;
(ii) At least 25 project applications for financing in the nature protection sector, for the total value of projects amounting to € 50 million (2017)
No change
Annex 3: Matrix summarizing progress towards CPS Objectives
Pillar I: Fiscal Adjustment through Reforms at the Sector Level
CPS Objectives and Indicators
Progress to Date (As of March 2016)
Instruments
1. Improving sustainability of revenue enhancing policy as indicated by:
Improved tax gap as a percentage of total GDP
Baseline: 2.7% (2012)
Target: 2.0% (2017)
On track Status: 2.5 % (2014)
Source: RAMP ICR
Ongoing activities at time of CPS:
ERDPL 2 (delivered 2014)
RAMP (delivered 2015)
Planned CPS Activities:
DPL and ASA did not materialize
2. Improving the targeting of social assistance programs as indicated by:
Means-tested programs as a share of all social assistance programs increased Baseline: 16% (2012)
Target: 20% (2017)
Status: 17.2 % (2014)
The share of means-tested social programs in overall central government social spending increased from 16.1 percent in 2012. Bank support has been through ERDPL2 and will continue through the Social Protection System Modernization Project approved in September 2014. The operation primarily focuses on realizing administrative efficiencies in the social sector.
Ongoing activities at time of CPS:
ERDPL2 (delivered 2014)
Planned activities:
Social Protection System Modernization Project (approved in FY15)
DPL (dropped), but could be revamped.
Activation TA (regional, delivered)
PFR and NRP TA (delivered)
3. Introducing cost rationalization measures in the health sector as indicated by:
Total public accrual health spending reduced
Baseline: 6.6% (preliminary, 2012)
Target 6.1 % (2017)
Further rationalization and reorganization of hospital system
Baseline: 6 beds used for hospital admissions per 1000 inhabitants (2012)
Target: 5 beds used for hospital admissions per 1000 (2017)
Met The baseline has been revised to align fully with an accrual method accounting.
Revised baseline : 7.6 percent (2012)
Status: 6.9 percent (2014)
Note: This target is considered met given the revised baseline as health spending as a percentage of GDP has been reduced by .7 points surpassing the original target of .5 percent.
This PLR proposes to replace the indicator on rationalization of hospital beds with the DLI monitored under the project, i.e., a reduction in the total number of acute care beds by 20 percent from 15,930 (2012) to 12,800 (2017). The first stage of the DLI was achieved and the 2017 target is expected to be reached by CPS completion.
Ongoing activities:
ERDPL 2 (delivered 2014)
Development of Emergency Medical Services and Investment Planning
Planned activities:
Health PFORR (approved)
DPL (dropped), but could be revamped
PFR and Spending Review (delivered)
Pillar II Innovation and Trade Competitiveness for Growth and Shared Prosperity
CPS Objectives and Indicators
Progress to Date
(As of March 2016)
Instruments
4. Contributing to the coherence and implementation of strategic plans in railway and energy sectors and improvements in airport infrastructure as indicated by:
Implementation of restructuring plans for railway sector companies and medium-term strategy for the rail sector consistent with the EU 2014-20 funding period
Implementation of Croatia Energy Strategy 2009-20 related to the renewable energy and district heating
Baseline:
Revised restructuring plans of railway companies
Energy Strategy in place (2012);
Target: Railway Modal Strategy 2014-2020 and medium term contracts in place for Passenger Services and Infrastructure Management consistent with the strategy
Action plan adopted for feed-in tariffs for renewable energy resources and for improving the efficiency of the district heating sector.
On track
The work on railways has the support of a newly approved project which will have its impact in the following CPF. During the remaining year of this CPS the delivery will focus primarily on the restructuring plans for the three railway companies and a medium-term strategy for the sector, linked to the funding of the EU.
The indicator of a multi Modal Strategy is on track to be met by CPS completion.
Met
Action plan adopted for feed-in tariffs for renewable energy resources and for improving the efficiency of the district heating (DH) sector. The feed-in tariff system for RER and DH was adopted in 2013, with amendments in 2014 and 2015. The regulator continues to improve the system and new amendments are now envisaged.
The Bank contributed by reviewing the methodology for feed-in tariffs, especially for district heating sector, and provided recommendation to HERA – Croatian Energy Regulating Agency, some of which accepted and adopted in the new tariff system, in particular for the DH. Such recommendations including the establishing prices for DH – to be market-oriented and not to be government-influenced.
Ongoing activities:
Railway Policy Note
Croatia Energy Sector Review
Planned activities:
Railway Lending (approved)
TA for Public Enterprise Reform (dropped)
Energy Vulnerability Note (delivered)
Partners:
EBRD
EC
5. Improving efficiency and reducing arrears in the judicial system as indicated by:
Case backlog in judiciary decreased
Baseline: 498,601 (2012)
Target: 300,000 (2017)
Met
Actual: 349,051 (2015)
As of April 2016, there are 349,051 backlogged cases in the courts. That is down from 437,892 in 2010. This is considered achieved if you consider the project target indicator of 394,103 (2017). [Note Revised figures for Baseline and Target]
Source: Justice Sector Support Project
Note: The Integrated Land Administration project has made additional contributions by reducing times to registering property and reducing corresponding backlogs.
Ongoing activities:
Integrated Land Administration System project (closing in April 2017)
Justice Sector Support Project (closing in June 2016)
ERDPL2 (closed)
Planned activities:
TA on Public Administration (not delivered)
DPL (not delivered)
Partners:
EC
6. Contributing to diversity and security of energy supply by financing energy efficiency and renewable energy projects as indicated by:
Additional renewable energy generation capacity installed
Target: 108 MW (2017)
GHG emissions avoided per year
Target: 75,000 tCO2 equivalent (2017)
Met
IFC has been supporting investments in the energy sector, which has increased the renewable energy installed capacity and contributed to the reduction of the annual GHG emissions.
IFC financing for renewable energy (three power plants financed with IFC support already commissioned)
IFC financing for energy efficiency projects through financial intermediaries (did not materialize)
Partners:
EBRD
EC
7. Supporting competitive local companies to expand in the region and increase exports as indicated by:
Level of exports of beneficiary companies
Baseline: HRK 4.35 billion (2011)
Target: At least preserve the level of exports (2017)
Number of outstanding MSME loans in the portfolio IFC’s client banks
Baseline: 6,000 (2012)
Target: At least preserve the same level (2016)
On track The exports of beneficiary firms has increased by 20 percent as per the latest ISR of the Export Finance Intermediation Loan (P116080)—March 2016.
As of the end of 2014, IFC reached 5,400 through the new client bank, which is expected to increase by at least 10% by the end of 2016.
IFC financing to export oriented companies, SMEs, private sector infrastructure investments, FDIs and regional initiatives
REPARIS10
Partners:
EIB
CEB
KfW
Pillar III. Helping Maximize the Economic Benefits of Becoming an EU Member State
8. Improving coherence and credibility of national strategic and policy documents needed for the EU funds absorption and management as indicated by:
National strategic and policy documents, including sector specific strategies, needed for the use of EU Funds, adopted by relevant authorities
Baseline: no documents in place (2012)
Target Sector strategies adopted: (i) National Education, Science and Technology Strategy; (ii) National Innovation Strategy;
(iii) Research and Innovation Strategy for Smart Specialization; (iv) Policy advice/recommendations in the areas of irrigation, rural development, transport, SME and water/environment sector; (v) National Technical and Economic Study for Management of Wastewater Treatment Sludge (2017)
Met
National Innovation Strategy has been prepared with contribution from Second Science and Technology Project and adopted December 2014 in line with Europe 2020 Strategy.
National Education, Science and Technology Strategy, an ex-ante-conditionality for EU funds, has been prepared under STP2, and adopted by the Parliament in December 2014.
National Research Infrastructure Roadmap was prepared under STP2 as an input for Smart Specialization Strategy, as part of EU funds requirements. The document is now under revision to reflect the final version of Croatia’s Smart Specialization Strategy, which the Government adopted in March 2016.
Policy advice/recommendations in the areas of irrigation, rural development, transport, SME and water/environment sector have been provided through EU Preparedness TA throughout three years. Peer reviewing also included the Partnership Agreement and Operation Program Cohesion and Competitiveness – the primary strategic documents for EU funds 2014-20 ;
National Technical and Economic Study for Management of Wastewater Treatment Sludge addressed a EU requirement and was prepared under the Coastal Cities Pollution Control Project 2. A draft National Waste and Leachate Management Plan was prepared under the Regional GEF Adriatic project to meet requirements under the EU waste management Directive.
Ongoing activities:
EU Preparedness TA (delivered)
Public Finance Review (delivered)
Integrated Land Administration System
EU Natura 2000 Integration
Second Science and Technology Project
Planned activities:
EU Water sector compliance Project (dropped)
NRP TA (delivered)
Partners
EC
9. Contributing to Croatia’s readiness and capacity to build the project pipeline for absorbing EU Fundsin selected sectors as indicated by:
Number and value of project applications prepared and/or submitted for financing from EU Funds in research and innovation and nature protection
Baseline: no project proposals (2012)
Target: (i) At least 6 project applications for financing in research, development and innovation sector, for the total value of projects amounting to € 50 million;
(ii) At least 25 project applications for financing in the nature protection sector, for the total value of projects amounting to € 50 million (2017)
On track to be surpassed. The WB will help in the preparation of applications for absorption of EU funds estimated at over EUR 500 million, far in excess of the EUR100 million euros foreseen initially.
Under the Second Science and Technology project (STP2), six (6) project applications are on course for an estimated value of EUR 150-200 million. Of these six, 1 project already received financing worth EUR 12.8 million; 4 large R&D infrastructure projects are under preparation. Most of these applications are expected to be completed by mid-2017, and the rest by end-2018.
Under EU Natura 2000 Integration Project the target remains on course. Four project proposals are accepted and financed from EU funds, while further 18 visitor infrastructure projects worth EUR 87 million and 12 projects closely related to the nature protection worth EUR 117 million are in final stages of preparation. It is expected that these projects will be implemented within EU financial framework 2014-20.
Under Coastal Cities 2 Project, five (5) projects design are being prepared for around EUR 230 million and will be completed by the end of 2016.
Under Rijeka Gateway 2 Project, one (1) EU project application under EU Connecting Europe Facility worth 30 million EUR has already been approved.
Under the Justice Sector Support Project, the Bank supported the preparation of two project applications for EUR 10 million.
Ongoing activities:
EU Preparedness TA (delivered)
EU Natura 2000 Integration
Second Science and Technology Project
Justice Sector Support Project (closing in June 2016)
Entire WB portfolio
Partners
EC
1 Central Bank’s estimate of 1.3 percent of GDP.
2 At the time the Croatia CPS was prepared, EU-SILC for Croatia was not accessible, so national poverty figures reported in the document are based on the Croatia Household Budget Survey for 2008-2010. In contrast, the national poverty figures reported in the Croatia PLR are constructed using the EU-SILC. They are based on income (not consumption), and calculated using the EU relative poverty line of 60% of median income.
3 The CPS included an analysis on gender issues, including female labor force participation. While still high, gaps in labor market outcomes are narrowing. The labor force participation rate among women (at 46.8 percent) and men (at 59.2 percent) narrowed by 2 percentage points by 2015 compared to 2012.
4 Based on latest available data, incomes for the bottom 40 percent increased by 1.6 percent compared to the total population of 0.3 percent in the 2007-12 period.
5 It will not be possible to monitor further gains in closing the tax gap because the supporting project, RAMP, is closing. IOTA tracks the same indicator but with a considerable lag and thus cannot be used to track further progress. Thus, the PLR revises the target to the gains by 2014, and use IOTA confirm this progress.
6 The drafting of the indicator has been revised to keep the original target of a .5 percent of GDP decrease, regardless of the baseline, given the impact of national account revisions on benchmarks and targets."
7 The figures in the CPS Results Framework were not consistent with those in the Project. For the purpose of assessing progress the correct baseline, target and current status figures have been used.
8 Listed in Croatia CPS Table 4 (Indicative lending FY14-15). Venture Capital operation, PCG Operation and GEF Adriatic Sea were listed in paragraphs 71 and 85 of the text respectively. The PCG was approved prior to the CPS period.
9 Road to Europe Program of Accounting Reforms and Institutional Strengthening
10 Road to Europe Program of Accounting Reforms and Institutional Strengthening
