European Bank for Reconstruction and Development President Odile Renaud-Basso said on Friday that renewable energy sources, primarily from the sun and wind, are currently the main priority of the bank's activities in Croatia, calling for facilitating and stepping up investments in that sector.

Renaud-Basso is on her first visit to Croatia as head of EBRD, and she will use the visit to get better acquainted with the potential for the bank’s investments, with emphasis on private sector projects.

The visit comes at a time when the EBRD is marking 30 years of operation in Croatia, during which it invested more than €4.5 billion in the country’s private and public sectors, provided consultancy to more than 800 small and medium businesses and supported the process of the country’s integration with the EU.

Renaud-Basso told a news conference at the EBRD office in Zagreb that in 2022 the bank stepped up its activities in Croatia, with investments totalling close to €300 million, with 82% referring to the private sector.

She expressed hope the same level of investment would be maintained in 2023, noting that one of the bank’s key priorities was the green transition, and that the top priority was investment in the production of renewable energy sources, primarily those from the sun and wind, as well as an easier and faster development of the sector.

Renaud-Basso said that the area of renewable energy was very important in terms of attracting foreign investors, and its development was in the long run of crucial importance for the country’s competitiveness but that it was necessary to remove administrative bottlenecks and excessive red tape that slow down such projects.

There is great potential that needs to materialise, she said, recalling the EBRD’s having financed a recently presented study showing that the potential capacity of offshore wind parks with a low impact on the environment and the sea in Croatia was 25 GW.

The EBRD’s contribution to current projects for solar and wind parks in Croatia amounts to around €170 million, and the projects are expected to result in an increase in the production capacity of 250 MW.

The green transition, in addition to renewable sources, also includes issues of greater energy efficiency, and apart from speeding up the decarbonisation process and reducing carbon dioxide emissions, it would also help increase the country’s energy security, the EBRD president said.

Meetings with PM and Zagreb Mayor

Renaud-Basso discussed the green agenda also at a meeting with Finance Minister Marko Primorac, and she will discuss it also at a meeting with Prime Minister Andrej Plenkovic, to take place at the Dubrovnik Forum on Saturday.

Renaud-Basso also met with Zagreb Mayor Tomislav Tomasevic, and they discussed energy efficiency, transport infrastructure projects, waste management, the renovation of the water supply network, and the revitalisation of industrial zones.

Renaud-Basso is also to meet with private companies from the energy and IT sectors, having put emphasis on the IT sector as one with great potential for investments and further development.

The EBRD’s initiatives in Croatia in 2023 include promoting female participation on corporate boards, Ukrainian refugees in the labour market and post-earthquake urban development for the city of Petrinja.

The EBRD is currently providing technical assistance to the government on green, post-earthquake reconstruction of public buildings and improving governance and management of state-owned real estate, the bank said.

Croatia among countries with biggest declines in non-performing loans in 2022

In its latest NPL Monitor publication on non-performing loans, which it prepares as part of the Vienna Initiative, the EBRD said that in 2022 Croatia was among central, eastern and southeastern European countries with the biggest declines in the share of non-performing loans in total loans, with NPLs in Croatia having dropped by 1.4 percentage points, from 5.7% in 2021 to 4.3% of total loans in late 2022, or €253.8 million.

Bad debt has continued to decline in the region, and in 2022 the average decline was 0.4 pp, its lowest level since the NPL Monitor was first published in 2016. The share of NPLs in total loans in the region thus in late 2022 was 2.3% or €27.4 billion.

The banking sector in the European Union and the broader central, eastern and south-eastern European (CESEE) region has remained stable and resilient, the EBRD said but warned against complacency, since vulnerabilities remain in most CESEE countries.

Persistent macroeconomic pressures, including high inflation and interest rates, combined with low economic growth prospects in many jurisdictions, are contributing to stress in many asset classes, the bank said, noting that in the coming months the share of NPLs could increase.