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Nov 06, 2007 20:19 EEST
(adds news conference of the Delegation of the European Commission in Zagreb)</p>ZAGREB
November 6 (SeeNews) - The European Commission on Tuesday urged EU candidate Croatia to step up its fight against corruption and improve its judiciary and public administration.
“Considerable challenges remain in key areas, such as reform of the inefficient judicial system, public administration reform and fighting corruption, which remains widespread," the European Union executive said in a country progress report released on Tuesday.
The European Commission said the accession negotiations with Croatia are progressing well and it hopes the country will be able to meet the outstanding benchmarks shortly.
Croatia is becoming a positive benchmark for the other countries of the Western Balkans, EU Enlargement Commissioner Olli Rehn told a news conference in Brussels. He added that the negotiations with Croatia are entering a decisive stage.
According to the Commission report, progress in the structural reforms, including the restructuring of the shipbuilding and steel sectors, is slow and state intervention in the economy remains significant.
The European Commission reiterated its position that Croatia has a functioning market economy. “It should be able to cope with competitive pressures and market forces within the Union in the medium term, provided that it implements its comprehensive reform programme with determination in order to reduce structural weaknesses,” the report said.
The business environment in Croatia has improved, private investment has picked up and the financial sector has become more stable, the Commission said.
“Further regional cooperation is vital, as are efforts to solve outstanding bilateral problems with neighbours, especially on border delimitation,” the report said.
The report identifies minority rights and refugee returns as areas to which Croatia should pay increased attention.
Since the beginning of EU membership talks in October 2005 the former Yugoslav republic has opened 14 of the 35 policy chapters of the EU body of law with two of them temporarily closed.
“We see that macroeconomic indicators in Croatia are globally positive,” the head of the delegation of the European Commission to Croatia, Vincent Degert, told a news conference in Zagreb. He said the country’s gross domestic product should rise by a real 6.0% this year, “a substantial increase” from the 4.8% growth last year, inflation and the national currency’s exchange rate should be relatively stable and foreign direct investments on the rise. Degert welcomed developments to complete privatisation of a number of Croatian companies like the steel works in Split and Sisak.
However, Degert said, there are a number of risks and challenges ahead of Croatia like the country's external imbalances with high level of imports, the country’s “rather high” current account deficit equivalent to some 8.0% of the GDP and foreign debt-to-GDP ratio of 85%. He reiterated necessity for Croatia to reduce government aid to some troubled companies to comply with market competition rules of the Union.
“Overall, we see very encouraging steps but we are entering the most challenging period for Croatia,” he said.
The Adriatic country of 4.4 million people hopes to join the EU by the end of the decade.
“Today, I think, the ball is largely in Croatian hands,” Degert said when asked whether Croatia can join the bloc before 2010.
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