Preparations for the Introduction of the Euro Are Going According to Plan

Deputy Prime Minister and Minister of Finance Zdravko Marić stated on Wednesday that the fulfillment of criteria related to Croatia’s obligations taken after entering the European Exchange Rate Mechanism ERM II is proceeding according to plan and announced that the Government will adopt guidelines for budget limits for the next three years at its meeting this week.

– There are no delays; on the contrary, we are even moving a bit faster – said Marić in a statement after the meeting of the National Council for the Introduction of the Euro as the official currency in the Republic of Croatia, adding that it is very important for Croatia to meet the convergence criteria, i.e., the Maastricht criteria.

By entering ERM II, Croatia must meet the Maastricht criteria of nominal convergence, as well as implement the reform measures outlined in the Action Plan. The Maastricht criteria relate to exchange rate stability, price stability, interest rate stability, along with two important indicators concerning public finances – budget deficit and public debt, while the Action Plan includes eight measures in four areas, which relate to preventing money laundering, strengthening the business environment, enhancing governance in the public sector, and strengthening the entire judicial system.

– At this week’s Government meeting, among other things, we will proceed further in our budget process, in phases as provided by the Law on the State Budget, so the Government should adopt guidelines or budget limits for the next three years, which will be fully in line with what we have set out in the convergence program – noted Marić, reminding that in communication with the European Commission within the framework of the European Semester, this program was positively assessed.

– We believe that in this regard we will be fully aligned with the criteria and meet all that is expected of us, not only due to the introduction of the euro but because we, as a country, have learned how important it is to have sustainable public finances – emphasized Marić.

He reminded that after the Government reduced the share of public debt in GDP by almost 12 percentage points over the past four years, the COVID pandemic caused a one-time significant effect on the economy and the budget, and instead of achieving a reduction in the share of public debt below 70 percent of GDP this year, it has increased to 88.7 percent of GDP.

With the budget for this year, Marić said, the share of public debt in GDP is again returning to a downward trajectory, and this trend will continue in the next three-year period.

The convergence program is a regular document adopted within the dialogue with European institutions as part of the European Semester. In April, the Government adopted the eighth Convergence Program for the period from 2022 to  2024, which forecasts an economic growth rate of 5.2 percent for this year, with an expected acceleration to 6.6 percent in 2022 and 4.1 percent in 2023.

The targeted general government deficit this year is 3.8 percent of GDP, but already in 2022, a deficit within the Maastricht criteria is expected and planned – 2.6 percent of GDP, followed by 1.9 percent in 2023 and 1.5 percent of GDP in 2024. At the same time, public debt will decrease from 86.6 percent of GDP in 2021 to 82.5 percent in 2022, 79.5 percent in 2023, and 76.8 percent of GDP in 2024.

Graphic Solutions for the Croatian Euro Coin 

Prime Minister Andrej Plenković, at the beginning of the meeting of the National Council for the Introduction of the Euro as the official currency in the Republic of Croatia, stated that it is important to timely inform the public about all steps in the process that should result in the introduction of the euro in 2023.

He reminded that in the public consultation based on the proposal of the expert commission, five motifs for euro coins were offered – the Croatian checkerboard, a map of Croatia, the kuna, Glagolitic script, and Dubrovnik. From these five motifs, citizens had the opportunity to propose one of their own, and after the consultation was completed, the final selection included the Croatian checkerboard, a map of Croatia, the kuna, Glagolitic script, and the likeness of Nikola Tesla.

He explained that the idea is for the common base on all coins to be the checkerboard, and on the 2 euro coin, there will be a geographical map of Croatia, on the one euro coin, the motif of the kuna, and on the 50, 20, and 10 cent coins, the likeness of Nikola Tesla, while on the one, two, and five cent coins, the motif of Glagolitic script.

The Prime Minister thanked everyone who participated in the process of selecting motifs for euro coins, especially the citizens who made a concrete contribution to the selection of motifs. The idea is, as he said, to submit the graphic solutions for future Croatian euro coins to the European Commission (EC) and the Council by mid-October, in accordance with the established procedure.

The Euro Should Ensure Faster Growth for the Economy

Boris Vujčić, Governor of the Croatian National Bank (HNB), announced that on August 2, the HNB will announce a public competition for the graphic solution, i.e., the design of the coins, and then the approved solution will be sent to the EC and the Council for confirmation.

He also stated that a generous prize fund of half a million kuna is planned for the best solutions. The intention is to reward the three best graphic representations for each of the proposed four motifs, with the first prize winners, who will be sent for approval to the EC and the Council, receiving 70 thousand kuna each.

In response to journalists’ questions, Vujčić said that in all countries after the introduction of the euro, it has been shown that the standard of living has increased, meaning that wages have grown faster than prices.

– Therefore, there is no reason to expect that it will not be the case in Croatia – explained Vujčić.

He reiterated that control mechanisms will be established and that all will be required to publish prices in both kunas and euros before and after the introduction of the euro.

When asked how much the average salary will increase after the introduction of the euro, he said that salaries will primarily depend on productivity and the success of the economy. He explained that the euro enables faster productivity growth through improvements for the economy it brings, so a greater increase in salaries can be expected than would be the case if the euro were not introduced.

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