New Cost: You Might Be Surprised by the Staggering Membership Fee for the Eurozone, Let’s Hope It Pays Off

Croatia’s membership in international institutions brings a range of benefits, but it also represents a significant cost. We have reviewed the largest items in the budget.

The membership fee in the EU for 2023 amounts to 662 million euros (6.1 percent more than this year). We will also pay 94 million euros next year for membership in international financial institutions. The difference of about 90 million relates to capital increases for the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), membership in the Asian Infrastructure Investment Bank (AIIB), replenishment of funds for the International Development Association (IDA), and a new cost, the expected payment into the capital upon achieving membership in the European Stability Mechanism (ESM).

The membership fee in the ESM, which allows eurozone countries to avoid and overcome financial crises and maintain long-term financial stability and prosperity, will amount to 83.8 million kuna over the next five years, totaling 419.05 million euros. And that’s not all, as this includes a relief related to the first 12 years of membership, which expires at the beginning of 2035, when an additional 236 million euros will need to be paid. Therefore, the membership fee for entering the eurozone, or the ESM, will cost us 655 million euros! Let’s hope it pays off.

Regarding international cooperation, the budget has allocated 1.73 billion euros for servicing external debt. Of that, 1.56 billion is for financing obligations arising from bonds issued abroad.

Next year, 151 million euros will also be spent from the budget to repay loans to international organizations: the International Bank for Reconstruction and Development (IBRD), the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the Council of Europe Development Bank (CEB). Loans are used to finance the reconstruction and construction of roads, railways, judicial reform, the health sector, the reconstruction and construction of schools, agriculture, improvement of water and communal infrastructure, etc. There is also the repayment of a loan to the European Commission (EC) for temporary support to reduce the risk of unemployment during the pandemic.

Among international obligations, there is an Agreement with the Holy See under which Croatia has committed to provide the Catholic Church from the state budget with funds related to the costs ‘for the general socially valuable work of the Catholic Church in the service of citizens in the cultural, educational, social, and ethical fields, costs of maintaining clergy and other church officials, costs of building and maintaining churches and pastoral centers not listed as cultural monuments, and contributions for the charitable activities of the Catholic Church.’ For 2023, 47.4 million euros is planned, which is 4.3 percent more than this year. The amount is based on 1551 Roman Catholic parishes in 2020, and for each, 2548 euros is paid monthly (two average gross salaries for 2020 amounting to 1274 euros).

International membership fees and other obligations related to joint NATO financing (along with EU defense capabilities) amount to 9.2 million euros, and membership in the Three Seas Initiative, or investment in the investment fund of that initiative, will cost us 20 million euros over five years, or nearly seven million euros in 2023.