GEOFIN Working Paper No. 9

Mikuš, M. (2020) Financialization of the state in Croatia: findings of an interview-based case study. GEOFIN Working Paper No. 9. Dublin: GEOFIN research, Trinity College Dublin.


This paper builds on interviews with members of the Croatian financial community (private and central bankers, pension fund managers, regulators, experts), statistical data, and other secondary sources to show that the key channels of state financialization in Croatia were public debt growth and pension system financialization. As a result of these interrelated processes, public debt assessment, management and sustainability, relationships between debt and monetary and fiscal policy, and the implications of pension funds for debt management and pension adequacy became increasingly significant policy considerations. The explosion of public debt and debt servicing costs after the Global Financial Crisis period contributed to a deepening and consolidation of a neoliberal (austerity) policy regime. Sovereign debt management underwent modest development and financialization while remaining characterized by limited competition and transparency and strong influence of a limited set of financial actors. Monetary arrangements conducive to peripheral financialization (informal euro peg) were maintained and perceived as the only realistic alternative. Overall, the Croatian financial community supported a continuation and potentially deepening of state financialization by privileging the interests and rationalities of creditors and other financial actors in policymaking, promoting the development and financialization of pension funds, using financialized debt management techniques, and so forth. At the same time, public debt and pension system issues informed growing concerns over the long-term sustainability of the current policy and politico-economic regime.

Keywords: Croatia; financialization; the state.

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