Numerous obstacles remain on the path to the EU
Overview:
Macroeconomic policies remain appropriate although the economy will, like most of its peers, undergo a contraction this year given the severe global economic downturn. The government has responded to the worsening global outlook by approving a rebalanced budget. Economic vulnerabilities, nevertheless, remain with gross external debt to GDP high and the economy extremely dependent on revenues from tourism. Croatia succeeded in joining NATO this month. However, the government’s other key foreign policy goal - joining the EU - remains a work in progress. While attention has been drawn to the border dispute with Slovenia, technical negotiations are well behind schedule and there are also issues outstanding with the ICTY. It is clear that Accession negotiations will not be completed in 2009.