The European Commission gives Croatia another green light for the introduction of the euro

It is well known that Croatia is getting closer every day to entering the eurozone, and the results of this year's convergence report have finally emerged. The report comes from the European Commission, and it once again confirmed that the Republic of Croatia is ready to introduce the euro as its official currency on January 1, 2023, thus becoming the 20th member of the eurozone.

On this occasion, the Executive Vice President of the European Commission Valdis Dombrovskis held an online interview with Croatian journalists the day before the press conference with Prime Minister Andrej Plenković. He congratulated the Republic of Croatia on the introduction of the euro as its official currency.

– The introduction of the euro will have a positive effect not only on Croatia but also on foreign investors and the European market. It ensures positive development of the Croatian economy, and an advantage is that Croatia already had a fixed exchange rate between the kuna and the euro – Dombrovskis stated.

The European Commission's convergence report is published annually, providing an assessment of progress for all countries that are not yet members of the eurozone but are moving towards the introduction of the euro. The report forms the basis for the European Union's decision on whether countries are ready for the euro or have not yet met all the criteria.

After the positive report from the Commission, it is expected that the European Council will make final decisions on the introduction of the euro in Croatia in the first half of July 2022, following discussions in the European Parliament and Eurogroup and after final opinions from the Parliament and the European Central Bank.

Despite the satisfaction expressed by the European Commission and the Government of the Republic of Croatia, numerous questions arise regarding the introduction of the euro, one of the most important being the impact of the currency change on Croatian households and whether it means an increase in the prices of basic foodstuffs and other necessities.

The Vice President of the Commission, Valdis Dombrovskis, stated that the euro will not have a negative effect on Croatia.

– Inflation is very high regardless of the eurozone, and prices are rising in any case. Due to the situation in Ukraine, most European countries are feeling high energy prices, and disruptions in supply chains and the war are the reasons for the increase in food prices and other necessities. These issues are not related to the euro, the Commission does not see a connection between inflation and the introduction of the euro – Dombrovskis stated.

He also noted that with the introduction of the euro, there is always a minimal increase in prices due to the costs of conversion itself, but such costs are entirely expected for any country in transition.

The Vice President of the Commission also mentioned that companies will not raise prices due to the transition to the euro but will be recalculated strictly according to the official exchange rate, and Croatian authorities will also take care of this.

– Croatia meets all the criteria for the euro, and all indications are currently positive. We expect such a reaction in the future from the rest of the eurozone members – Dombrovskis said.

He also added that he expects that due to the current situation with supply chains and the war in Ukraine, the European economy will slow down, but it will certainly not stop.

– To stop the war, we must provide as much financial, humanitarian, and military assistance to Ukraine and pressure Russia with sanctions to stop the war, which is the reason for numerous economic problems – he concluded, adding that this is precisely why the REPowerEU initiative was launched.