Croatia: EU Commission endorses assessment of €700m RRF disbursement request

The European Commission has today endorsed a positive preliminary assessment of Croatia’s payment request for €700 million in grants under the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU.

On 15 March, Croatia submitted to the Commission a payment request based on the achievement of the 33 milestones and one target selected in the Council Implementing Decision for the first instalment. They cover reforms and investments in the areas of health, social policy, adult education, public administration, anti-corruption, fiscal, audit and control, anti-money laundering, energy, transport, water and waste management as well as energy efficiency of buildings.

With their request, the Croatian authorities provided detailed and comprehensive evidence demonstrating the fulfilment of the 34 milestones and targets. The Commission has thoroughly assessed this information before presenting its positive preliminary assessment of the payment request.

The Croatian recovery and resilience plan includes a wide range of investment and reform measures in six thematic components. The plan will be supported by up to €6.3 billion in grants, 13% of which (€818 million) was disbursed to Croatia in pre-financing on 28 September 2021.

Payments under the RRF are performance-based and contingent on Member States implementing the investments and reforms outlined in their respective recovery and resilience plans.

Next steps

The Commission has now sent its positive preliminary assessment of Croatia’s fulfilment of the milestones and targets required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC’s opinion, to be delivered within a maximum of four weeks, should be taken into account in the Commission’s assessment. Following the EFC’s opinion, the Commission will adopt the final decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee. Following the adoption of the decision by the Commission, the disbursement to Croatia can take place.

The Commission will assess further payment requests by Croatia based on the fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.

The amounts disbursed to Member States are published in the Recovery and Resilience Scoreboard, which shows progress in the implementation of the national recovery and resilience plans.

Quotes by Members of the College:

President of the European Commission Ursula von der Leyen said:

“I have good news for Croatia: as soon as Member States give their green light, it will receive €700 million in grants under NextGenerationEU. Croatia has made swift progress in implementing the reforms and investments of its national recovery plan. For instance, it has taken important steps to strengthen the labour market and enhance social protection. Croatia has also adopted a national programme for the energy renovation of buildings and a plan to improve road safety. This is the first payment, and more will come. So keep up the good work and congratulations!”

Valdis Dombrovskis, Executive Vice-President for An Economy that Works for People said:

“Another positive step for Europe’s economic resilience as Croatia achieves the first milestones and target set out in its national recovery plan – congratulations. These will promote Croatia’s green transition in particular, with reforms in its energy, transport and water sectors along with energy renovation programmes for buildings. Croatia has also taken steps to tighten up on anti-money laundering, fight corruption and improve the governance of state-owned businesses: all helping to make its economy more efficient. Once the Commission’s assessment is reviewed and approved by Member States, Croatia should receive €700 million in grants to help make its economy more inclusive and resilient for many years to come.”

Paolo Gentiloni, Commissioner for Economy, said:

“This is an important moment in the roll-out of Croatia’s ambitious recovery and resilience plan. Our positive preliminary assessment of Croatia’s first payment request found that the country has successfully implemented the required 34 milestones and targets. These include a new Energy Efficiency Programme and a Waste Act that will support the green transition, as well as a number of measures to enhance education, employment and social protection. Once the relevant procedures are finalised, we will be able to make a payment of EUR 700 million. As the global economic and geopolitical context becomes more uncertain, delivering on Croatia’s reform and investment agenda is more crucial than ever.”

For More Information

Preliminary assessment

Question and Answers on Croatia’s disbursement request under NextGenerationEU

Press release on €818 million in pre-financing to Croatia

Question and Answers on Croatia’s recovery and resilience plan

Factsheet on Croatia’s recovery and resilience plan

Proposal for a Council Implementing Decision

Annex to the Proposal for a Council Implementing Decision

Staff-working document

Recovery and Resilience Facility

Recovery and Resilience Scoreboard

Recovery and Resilience Facility Regulation

Question and Answers on the Recovery and Resilience Facility

EU as a borrower website

[Updated on 10/05/2022 at 11:30]

How did the Commission assess Croatia’s first payment request?

On 15 March 2022, Croatia submitted to the Commission a request for the disbursement of €700 million under the Recovery and Resilience Facility (RRF). The request was based on the achievement of the 33 milestones and one target for the first instalment, as outlined in the Council Implementing Decision approving the plan. They cover reforms in the areas of health, social policy, adult education, anti-corruption, audit and control, anti-money laundering, energy, transport, water and waste management as well as energy efficiency of buildings. The Commission carried out its preliminary assessment of the request within the two months period foreseen by the RRF Regulation.

With their request, the Croatian authorities provided detailed and comprehensive evidence demonstrating the fulfilment of the 33 milestones and one target. The Commission has thoroughly assessed this information before endorsing the positive preliminary assessment of the payment request.

What are the next steps?

The Commission has now sent the positive preliminary assessment of Croatia’s fulfilment of the milestones and targets required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC’s opinion, to be delivered within maximum four weeks, should be taken into account in the Commission’s assessment. The Commission will adopt the decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee. Following the adoption of this decision by the Commission, the disbursement to Croatia would take place. The amounts disbursed to the Member States will be published in the Recovery and Resilience Scoreboard. The Commission has also shared its positive preliminary assessment with the European Parliament.

How do the milestones and targets achieved by Croatia so far effectively support the green transition?

The green transition is supported by specific reforms carried out by Croatia, such as the new Waste Act to improve waste management in the country as well as the adoption of energy renovation programmes for multi-apartment and cultural heritage buildings, and buildings in the areas of special state concern, which also aims to combat energy poverty.

Croatia also prepared a detailed investment plan for water and wastewater investments to ensure the prioritisation of mature and urgent projects, as well as to ensure coherence with other funding sources. Croatia developed a framework for the design and implementation of green urban renewal strategies and set up the one-stop shop for energy renovation and seismic reinforcement in order to reduce the administrative burden for citizens.

The Energy Efficiency Programme for decarbonising the energy sector has defined areas of investment in energy efficiency and district heating systems, including investment priorities until 2030, but also up to 2050. In addition, Croatia awarded 75 contracts to companies to support their transition to renewable energy sources and issued energy efficiency measures to support small, medium-sized and large businesses. Finally, Croatia established a legislative framework for the deployment of alternative fuels, which will encourage the production and use of advanced biofuels/hydrogen in transport and contribute to the increase of renewable energy in final energy consumption in the transport sector in the country and to the objectives of the green transition.

How do the milestones and targets achieved by Croatia so far effectively contribute to the digital transition?

While milestones and targets related to the digital transition are more concentrated in subsequent payment periods, one flagship milestone is already included in the first payment. It relates to the set-up of a unit for implementation and management of digital transformation projects in the Ministry of agriculture. The established unit, in cooperation with the relevant authorities, will plan and monitor a set of digital services in the agricultural sector, including: at least 30 digitalised public services, an operational smart Agriculture platform and a publicly accessible traceability information system. These investments will be presented in the forthcoming payment requests. The Smart Agriculture platform will set the basis for an efficient, profitable and sustainable Croatian agriculture sector by offering up-to-date, structured and timely information directly from the fields and farms, with appropriate expert support. The planned traceability information system is meant to monitor the traceability of agricultural and food products and better inform the consumer via a QR code.

How do the milestones and targets achieved by Croatia so far contribute to improving Croatia’s economic and social situation, and its resilience?

The milestones in the first payment request contain reforms to improve the anti-money laundering framework, the fiscal framework and the governance of state-owned businesses, all of which are important for the efficient functioning of the economy. Croatia also successfully implemented the milestones related to education, employment and social services. A revised adult learning legal framework increases the quality and relevance of adult education and facilitates the recognition of acquired knowledge and skills. The revised Minimum Wage Act, among other things, strengthens the minimum increases for overtime, night work, and work on Sundays and public holidays as well as controls and penalties for employers not complying with the new rules. The National Plan against Poverty and Social Exclusion 2021-2027 identifies priorities and needs for the fight against poverty and social exclusion. Priorities for the development of social services and the outline of needs of all user groups for different forms of care was comprehensively addressed in the National Plan for the Development of Social Services 2021-2027. The resilience of the health system will also be improved by the adoption of the National Health Development Plan 2021-2027, which aims at improving the health system and health outcomes.

Does the achievement of these first milestones and targets contribute to an effective implementation of the Plan?

The milestones and targets fulfilled constitute significant steps in the implementation of the Croatian recovery and resilience plan, and of its broader transformative reform agenda. They include important measures, such as measures to strengthen the capacity to design and implement public policies and projects. These measures will contribute to a better absorption capacity of the EU funds in Croatia. In the area of governance of public finances and justice system, the adopted reforms will strengthen the fiscal and the anti-money laundering frameworks, improve the management of state assets and enhance the anti-corruption system with a new framework. Updated legislation on preventing conflicts of interest is also included. Croatia also supported small, medium, and large businesses in their effort to switch to renewable energy sources by setting up a framework for increasing their energy efficiency and by taking measures to improve water and waste management. Croatia also took measures to strengthen the labour market and enhance social protection. Finally, Croatia upgraded its audit and control and relevant IT systems and validated its control and audit procedures concerning the organisation and treatment of data under the RRF.

For More Information