Croatia’s recovery and resilience plan

RRF FUNDED PROJECTS IN CROATIA

WHAT’S IN THE PLAN?

The reforms and investments in Croatia's plan are helping it to become more sustainable, resilient and better prepared for the challenges and opportunities of the green transition and digital transition. Following Council approval of Croatia’s plan on 08 December 2023, Croatia’s recovery and resilience plan was updated on 08 December 2023 also to introduce a REPowerEU chapter.

^{*This value includes also the part of the plan which is financed with national resources}

• 157 investment streams and 78 reforms
• 39% of the plan will support climate objectives 
• 20% of the plan will foster the digital transition.    

The transformative impact of Croatia’s plan is the result of a strong combination of reforms and investment which address the country’s specific challenges. The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted to accelerate the transition towards a more sustainable, low-carbon and climate-resilient economy, to support post-earthquake recovery, to maximise the benefits of the digital transformation and to ensure social cohesion. 

All measures have to be implemented within a tight time frame, as the Regulation establishing the Recovery and Resilience Facility requires all milestones and targets within the national plans to be completed by August 2026.

Croatia's REPowerEU chapter is worth €2.9 billion. It includes one new reform, four scaled-up reforms, as well as five new and three scaled-up investments drawing on existing measures. The chapter also covers  three existing investments, including one scaled-up investment, transferred from the original plan.

To finance this increased ambition, Croatia has asked for a share of its Brexit Adjustment Reserve to be transferred to the plan, amounting to €7.2 million. These funds would be added to Croatia’s REPowerEU grant of €269 million.

Key measures for REPowerEU 

REPowerEU measures in Croatia’s modified plan will help deliver on the REPowerEU Plan's objectives to make Europe independent of Russian fossil fuels well before 2030.

The new reform aims at increasing green skills and competences in the construction sector for non-EU workers, while the scaled-up reforms encourage the uptake of renewable energy sources by introducing a new self-consumption system, envisage new activities contributing to raising citizens' awareness on the green transition and provide additional funds for the development of additional green urban renewal strategies.

The new investments will increase the transmission and distribution capacities of the electricity network, establish a hydrogen-based economy through the North Adriatic Hydrogen Valley, strengthen the use of renewable energy sources in transport and heating, expand the capacity of the LNG Terminal on the Island of Krk and strengthen the gas transmission network towards Slovenia and Hungary. The scaled-up investment aims to support sustainable transport, the energy efficiency and post-earthquake reconstruction of buildings and energy poverty.

In the area of climate and environmental policies, Croatia faces a challenge of post-earthquake reconstruction and energy renovation of buildings, increasing the share of renewable energy and energy efficiency, improving the waste and water management and making mobility more sustainable and innovative. Preserving biodiversity and ecosystems and transitioning to green jobs and the circular economy are also high on the agenda.

Key measures for the green transition

• The plan supports the green transition through investment of €1,978 million in energy efficiency and post-earthquake reconstruction of buildings
• €728 million will be invested in sustainable mobility, notably in upgrading railway lines, autonomous electric taxis with supporting infrastructure adapted for people with disabilities, installing charging stations for electric vehicles and introducing zero-emission vehicles and vessels.
• The plan allocates €658 million to low-carbon energy transition through modernising energy infrastructure, supporting investments for the production of advanced biofuels and renewable hydrogen and financing innovative carbon capture and storage projects. 
• €542 million will be invested in supporting businesses for green transition and energy efficiency, supporting their projects aimed at boosting the green economy, sustainable tourism and investing in green technologies.

The modified plan, including the REPowerEU chapter, retained a strong focus of the plan on the green transition, devoting 39% of the available funds to measures that support climate objectives (down from 40% in the original plan).

Digital challenges for Croatia include the digitalisation of public administration, the provision of online public services and increasing fixed and wireless digital connectivity to facilitate investment in digital infrastructure in remote rural areas that are lagging behind in terms of gigabit connectivity services.

Key measures for the digital transition

• €283 million investment in digital transition of the public administration through digitalisation of the justice system, deployment of the Digital Identity Card and creation of a one-stop-shop for all public administration’ online services. 
• €130 million will be invested in increasing national broadband coverage with gigabit connectivity in rural areas and construction of electronic communications infrastructure for 5G network thereby increasing the digital connectivity of rural areas
• €84 million support for the digitalisation of higher education through investing in e-learning and digital teaching tools.

The modified plan retained the focus of the plan on the digital transition, devoting 20% of the available funds to measures that support digital objectives (same as in the original plan).

Key challenges for Croatia’s economy include low employment and activity rates, burdensome and complex business environment, low efficiency and high fragmentation of public administration, judiciary, fragmented and ineffective social protection system and the low quality of education. These challenges weigh on potential growth and employment.

Key measures in reinforcing economic and social resilience

• €277 million investment for redesigning active labour market policies to boost employment and self-employment, reskilling and upskilling and improving the provision and adequacy of social benefits and services.
• €1,995 million will be invested in education and research, including by improving access to early childhood education and care. 
• €739 million will be allocated to measures to improve the business environment through reducing administrative burdens, lowering regulatory requirements for professional services, and increasing access to financing for businesses.
• Support increasing the efficiency of the public sector and the justice system with €200 million.

More information on the event can be found here

Croatia’s plan is consistent with the challenges and priorities identified in the European Semester, the annual cycle of coordination and monitoring of each EU country’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)

DOCUMENTS