The government of Croatia handed out almost € 1.2 billion worth of subsides in 2006, according to a recently released annual report created by the Croatian Competition Agency (CCA). The 2006 subsidies amounted to a 63% increase over 2005.

According to the Annual Report on State Aid 2006, most of the increase was "due to significant rise of rescue aid awarded to shipyards, aid to transport sector (Croatian Railways), aid to agriculture and fisheries and regional aid."
 
The increase in rescue aid to shipyards was the result of a program to re-structure the struggling Croatian shipyards, which began in September of 2006. Under the program, € 290 million in state guarantees were granted in 2006, which raised total aid to shipyards to € 356 million, up from € 68.5 million in 2005.

However, aid to shipyards was not the sole factor in the dramatic increase in state subsidies. Other major sectors affecting the overall increase were aid to agriculture and fisheries, which together totaled € 345 million in 2006, up 27% from the previous year. This category of aid made up almost 30% of the total aid handed out in 2006.
 
The overall state aid in 2006 amounted to 8.95% of the Croatian government's annual total budget, and 3.43% of the country's GDP.
 
The report is based on data provided to the CCA by aid providers (i.e. government ministries and agencies), which can be flawed. According to the writers of the report, "aid providers, especially at the local level, still fail to notify state aid to the CCA, (so) it must be understood that state aid data shown in this annual report do not fully reflect the position of state aid in our country."
 
The CCA has produced the annual subsidy reports each year since 2003. They are required by the Stabilisation and Association Agreements signed between the European Union and Croatia in October of 2001.
 
The Croatian Annual Report on State Aid 2006 is available in English from the CCA website at:
http://www.aztn.hr/eng/pdf/izvjesca/ANNUAL_REPORT_SA_2006.pdf