CROATIAUPDATED | 11| 2014

2014 | 2020EU BUDGETS

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Global Europe

Administration

Compensation

Security & Citizenship

€ 199.828

€ 959.988in current prices: € 1.082.555

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The five European Structural and Investment Funds;

| The European Regional Development Fund

| The European Social Fund

| The Cohesion Fund

| The European Maritime and Fisheries Fund

| The European Agricultural Fund for Rural Development

ESI FUNDSTHE 5

| EU Member States are required to draw up and implement

strategic plans with investment priorities covering the five ESI

Funds.

| These Partnership Agreements (PAs) are negotiated between the

European Commission and national authorities, following their

consultation of various levels of governance, representatives from

interest groups, civil society and local

and regional representatives.

AGREEMENTSPARTNERSHIP

| Under Croatia's regional aid map, the entire territory of Croatia will be

eligible for regional aid as a region with a GDP below 75% of the EU

average from 1 July 2014 to 31 December 2020.

| The map also defines the maximum aid levels (so-called "aid intensities")

for initial investments by large enterprises at 25% of the total investment

cost in continental Croatia (which comprises 67.05% of the total population

of Croatia) and 35% of the total investment cost in Adriatic Croatia (which

comprises 32.95% of the total population of Croatia).

AID PERCENTAGESMAXIMUM

| Under the regional aid guidelines for 2014 - 2020, areas which have a

GDP per capita of below 75% of the EU average qualify as a matter of

priority for regional investment aid, as the main purpose of regional aid is

to foster the development of the less advantaged regions of Europe.

| For investments carried out by SMEs, these percentages can be

increased by 20 percentage points for small and 10 percentage points for

medium size enterprises.

AID PERCENTAGESMAXIMUM

CU

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STA

TU

STotal number

of OP s submitted

per country

Countries have

their OP s

adopted:21 OP >Denmark

1 OP >Lithuania

| Partnership Agreement Adopted 30 – 10 – 2014

| 4 Operational Programme’s submitted

| Adoption of OP’s by European commission in Q4 2014

| Exp.1st grant calls Q1 2015 for funding priorities related to OP’s

OPs should be submitted by Member States within 3 months following the

submission of the Partnership Agreement.

The Commission makes observations within 3 months and adopts the OP

no later than 6 months from the date of its submission.

PLANNING

The PA focus on the following priorities:

| Promoting innovation friendly business environment and developing a

competitive and innovation-driven economy by stimulating the

entrepreneurship, the research development and innovation, as well as the

e-economy

| Developing infrastructure for economic growth and employment, in

particular key networks (TEN-T) and sustainable urban transport

| Supporting a low-carbon and green economy, by encouraging a

sustainable and efficient use of natural resources, promoting the energy

efficiency, as well as the adaptation to climate change

PRIORITIESFUNDING

| Developing human capital growth and tackling the mismatch of the labour

skills by reforming the education curricula, developing the vocational

education and training and the self-employment

| Promoting social inclusion and reducing the risk of poverty by developing

the social services, tackling the different forms of discrimination, and

ensuring the shift from institutional to community-based services

| Improving the healthcare services in an effective and cost-efficient way

| Building a modern and professional public administration, developing the

social dialogue and ensuring the efficiency and impartiality of the judiciary.

PRIORITIESFUNDING

ESI funds will assist Croatia in achieving national targets of

EU2020 and its flagship initiatives:

| Boosting the R&D and innovation in the country, to attain the national

target of 1.4% of GDP invested in R&D (as against 0.75% in 2012), and

stimulating the RDI activities in the business sector

| More energy efficient economy, including the support to further

development of renewable energy (20% target, as against 15.7 in 2012)

RESULTSEXPECTED

| Increasing labour market participation and employment towards the

62.9% target (as against 55.4 in 2012), with a specific support to the

employability of the young people (youth employment initiative)

| Substantial effort on social inclusion, tackling the severe social challenges

faced by Croatia and contributing to the objective of reducing by 150 000

the number of people at risk of poverty or exclusion

| Supporting the national efforts to strengthen the education system, in

particular regarding the participation to the tertiary education of the people

aged 30-34 years, from 25.9% to 35% by 2020.

RESULTSEXPECTED

| In 2014-2020 Croatia is allocated around € 8,61 billion for Cohesion

Policy (ERDF, ESF, Cohesion Fund1) including €66.2 million for the Youth

Employment Initiative and €146.1 million for territorial cooperation.

| Additional €2 billion will be devoted to development of the agricultural

sector and rural areas from the European Agricultural Fund for Rural

Development (EAFRD). The allocation for European Maritime and

Fisheries Fund (EMFF)

amounts to some €252.6 million.

ALLOCATIONSFINANCIAL

Cohesion policy will be delivered by 4 operational programmes

(OPs), so 2 less compared to the 2007-13 period:

| One national OP co-financed by ERDF and CF (OP Competitiveness and

Cohesion)

| One national OP co-financed by ESF (OP Efficient Human Resources)

| One Rural Development Programme (co-financed by EAFRD)

| and one Fisheries programme (co-financed by EMFF).

ARCHITECTUREPROGRAMME

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THEMATIC OBJECTIVE& BY FUNDALLOCATION BROKEN DOWN BY