Croatia faces EC's Macroeconomic Imbalance Procedure

European Commission (EC) has considered whether to take Macroeconomic Imbalance Procedure in Croatia due to its failure to deal with the imbalance problems, visiting EC Vice-President for the Euro and Social Dialogue Valdis Dombrovskis said on Friday.

Macroeconomic imbalances had been identified in Croatia last year and the EC had defined six recommendations to address them, Dombrovskis told a press conference after meeting with Croatian Prime Minister Tihomir Oreskovic.

The recommendations concerned fiscal policy, the reform of the labor market and the pension system, but Croatia has made progress only in one area out of the six, the Croatian News agency Hina reported.

EC would closely monitor the implementation of structural reforms in the country, Dombrovskis said, adding EC would provide technical assistance to Croatia and help the country increase the absorption of EU funds.

Oreskovic said that Croatia had failed to implement the necessary reforms in previous years and as a result, it faced a possibility of corrective action. Croatia might become the first EU member country to be subjected to corrective measures, he added.

He said the government had made its plan to focus on reducing debt, increasing investment, cutting the budget deficit, reducing unemployment and launching specific reforms, adding that he hopes to see the results in the end.

The Macroeconomic Imbalance Procedure is a new mechanism introduced to address problems faced by EU economies as a result of the global financial crisis. No country has been subjected to this procedure so far. Endit