The European Commission has taken the next steps in the 2017 cycle of the European Semester of economic policy coordination. and the package includes among other things "recommendations to the Council to abrogate the Excessive Deficit Procedures (EDP) (under Article 126(12) of the Treaty on the Functioning of the European Union (TFEU)) for Croatia and Portugal as these countries have brought their deficits below the 3% of GDP Treaty reference value."
If the EU Council accepts the recommendation, the number of member-states in the corrective part of the Stability and Growth package it will be downsized from 24 in 2011 to four.
Thus, France, Spain, Greece and Great Britain remain in the EDP procedure.
The EDP is a corrective mechanism the European Union conceived to bring back the member states' budget deficits to below 3% of GDP and public debts to below 60% of GDP, in line with the Maastricht criteria.
Croatia has been in the EDP since January 2014, when the Council of the EU gave it until the end of 2016 to cut the budget deficit to 2.7%.
Last year, Croatia cut the deficit to 0.8% of GDP from 3.4% in 2015.
The Commission says in its Spring Economic Forecast that Croatia's deficit could increase to 1.1% of GDP, mainly due to the tax reform, and fall to 0.9% in 2018. The public debt is forecast to fall to 81.9% of GDP this year, from last year's 84.2%, and to 79.4% in 2018.
Croatia's public debt will remain above 60% of GDP for a long time, but the Commission does not look only at nominal figures, wishing to see a trend of decline, which Croatia is already showing.
Text: Hina