Building a new future: Picking up the pieces

A SUPPLEMENT TO EUROMONEY/MARCH 1998: CROATIA

As political debate in Croatia turns from security issues to the economy, president Franjo Tudjman's young technocrats are slowly winning their argument to open Croatia's economy to the rest of the world. Their achievements to date are impressive.

Since the overnight stabilization in 1993, the currency has hardly wobbled against the Deutschmark, inflation remains one of the lowest in transition Europe and GDP is now growing at a steady 6% to 7%. On top of this, external debt is low, at $4.8 billion or roughly 25% of GDP.

But there is much yet to be done. The reformers' success in restoring the country to its former wealth will depend on what happens in the next six to 12 months as difficult areas of reform - utility privatization, VAT reform, pension reform and the possibility of foreign takeovers - are put into practice.

So far,...