Saturday, 1 December 2018

Croatia’s ERM II Exchange Rate to Be Known Soon

ZAGREB, December 1, 2018 – Croatian National Bank Governor Boris Vujčić said on Friday that Croatian citizens would not have conversion costs when the country entered the euro area and that the ERM II exchange rate with which Croatia was expected to enter the Exchange Rate Mechanism could be known as early as next year.

He was responding to questions from the press at the government after the first meeting of the national council for the introduction of the euro in Croatia.

As part of ERM II, the national currency of a member state is tied to the euro and a median exchange rate is established. It is the result of a balanced exchange rate, which means the currency must not be either undervalued or overvalued.

"There will be no conversion cost. It will be automatic, based on the exchange rate to be established earlier," Vujčić said, adding that the rate might be known as early as next year. "That will be the rate with which we will enter the Exchange Rate Mechanism and which we will de facto have to maintain while in the Mechanism, which essentially means that this will be, possibly with very small oscillations, the conversion rate."

He said there would be no cost for citizens and that their deposits and loans denominated in euro would have to be changed based on that exchange rate.

Asked if this meant that the exchange rate with which Croatia would enter ERM II would be very close to the current exchange rate given that it would not be able to vary markedly as of next year, Vujčić said the rate would be close to the one Croatia had over the past 25 years, which "didn't oscillate much."

He recalled that the government and the central bank presented a joint euro strategy late last year, which underwent public consultation and which the government adopted in May.

Vujčić said talks about the next steps were being held with European partners and that the first step was entering ERM II, which envisages close cooperation with the euro area and joining the banking union.

He added that the European Commission and the European Central Bank were conducting due diligence of Croatia's economy as a prerequisite for continuing the talks.

Vujčić said he would soon resume talks on the contents of a letter which he and Finance Minister Zdravko Marić would send about membership of ERM II and in which Croatia would commit to certain things. By entering ERM II, Croatia must meet five convergence criteria which the Commission evaluates and if Croatia meets them, it enters the euro area, he added.

Addressing the same press conference, Minister Marić said that a country was invited to ERM II if it had a stable economy, sustainable growth rates and no imbalances.

Asked about the date of entering the euro area, he said the government's euro strategy did not specify formal deadlines for entering either ERM II or the euro area, and that one must also keep in mind that European partners would follow the whole process and make decisions about Croatia.

Marić recalled that 2005 was the last year when an EU member state entered ERM II and said Croatia must do all that was necessary so that, when certain steps intensified, it was as prepared as possible.

Asked about the previously mentioned five to 7-year deadline for entering the euro area, he said it was realistic.

The first meeting of the national council for the introduction of the euro was chaired by Prime Minister Andrej Plenković. It was attended by several ministers and representatives of employers and unions.

Marić called the meeting very constructive, saying employer and union representatives would not have attended had they anything against Croatia's entering the euro area.

Asked about employers' claims that they had not been sufficiently consulted about a minimum pay rise, he said Labour Minister Marko Pavić had announced that the government would correct the minimum pay by the end of the year but that the actual amount was not made public until the very end.

Marić said he was pleased that, even before VAT on fresh meat and fish, fruit, vegetables, eggs and nappies was due to be slashed on January 1, some retail chains had started to correct their prices.

For more on the Croatian National Bank, click here.

Tuesday, 30 October 2018

Zdravko Maric Unenthusiastic About Martina Dalic's Agrokor Book

In case you didn't know, Martina Dalic, the former deputy prime minister who spent a long time at Andrej Plenkovic's side, left her position earlier this year amid not only the Hotmail affair, in which she was sending highly sensitive emails via no less than Hotmail, but amid growing suspicion surrounding her in regard to the very messy Agrokor affair.

Now, despite the public's general opinion of her being less than sparkling and with all sorts of unsavoury suspicions and accusations about her involvement in Agrokor still flying around, left unanswered, Martina Dalic went ahead and published a book on Agrokor, causing raised eyebrows among many politicians, including MOST's leader Bozo Petrov, who was heavily involved in the Agrokor situation when it first came to light, especially given the fact that the crisis saw the former HDZ-MOST coalition collapse.

As Poslovni Dnevnik/Tomislav Pili writes on the 30th of October, 2018, Finance Minister Zdravko Maric, who felt the very personal unpleasantness of the Agrokor crisis on his own skin, stated quite bluntly that he didn't have any desire to comment on whether or not Martina Dalic should return to the government at all.

Marić used to work for Agrokor before taking up his position within the Croatian Government, this caused a lot of suspicion around him, too, as many across the political spectrum and in the general public failed to believe that he had no knowledge of the plethora of underhand deals and the threatening collapse of the company that eventually raised its ugly head in the spring of 2017. Despite the controversy, Maric stuck to his guns and held onto his position, with the situation eventually blowing over. Despite that, it doesn't come as much of a surprise that he'd prefer to avoid discussing Martina Dalic or her new book.

"I've got a good relationship with all the people I've worked with and am working with now, and if we have some disagreement, then we find a common language," the finance minister said briefly.

''I haven't read Martina Dalic's book and I don't know if I'll manage to,'' Maric added at the margins of Poslovni Dnevnik's conference. In response to a journalist's question as to whether everything worked well in regard to Agrokor's extraordinary administration, and why Martina Dalic had to leave, Maric expressed his lack of desire to comment on whether or not she should return to the government.

As for the dangers the Uljanik shipyard situation represents towards public debt, Maric said Uljanik's influence will of course have an effect on the overall fiscal policy outcome for this year.

"The only good thing about it is that it will have a one-off effect. From our side, we intend to solve [the situation] as soon as possible so as to avoid any further consequences. Nevertheless, by the end of the year, according to our projections and expectations, public debt will continue to decline,'' Maric emphasised.

"With regard to taking further steps, we can't influence the worsening global environment that much, but do we have certain mechanisms in our hands. I, as finance minister, am responsible for implementing fiscal policy. All we propose is a responsible, rational fiscal policy that suits all of the challenges we're facing. We're putting emphasis on a more stable public debt, but the basic idea of us all should be ​​economic growth, which will lead to stronger employment growth,'' Maric noted.

Journalists present at the conference in were also very interested in the disappearance of the so-called "mantra" about budget savings which has been being talking about a lot over recent years.

"I wouldn't say that is stopped. If you look at the structure of the expenditure side of the budget, the biggest item is the retirement expenditure. It's true that the issue of expenditure has been challenged more than once and we must not give up on that. We reduced interest costs by over two billion kuna, but we're still paying too much,'' Maric said.

Regarding retirement, the question of whether or not retirement benefits in the new Law on Croatian Defenders represent a budgetary burden arose, to which Maric responded that his ministry had looked into potential financial implications during the process of the adoption of the naw Law on Croatian Defenders.

"The Law on Croatian Defenders is fiscally viable and isn't an additional burden for the budget," Maric concluded.

Want to find out more about what exactly happened within Agrokor and learn more about Martina Dalic's role within it all? Click here and follow the news on Dalić, the Hotmail affair, the writing of Lex Agrokor, and more.


Click here for the original article by Tomislav Pili for Poslovni Dnevnik

Thursday, 27 September 2018

GDP Growth to Remain Steady Next Year

ZAGREB, September 27, 2018 - Next year, the Croatian economy is expected to grow roughly at the same rate as this year, or "slightly below three percent of GDP", Croatian National Bank (HNB) Governor Boris Vujčić said on Wednesday, warning of the first signs of external risks.

Wednesday, 11 July 2018

Boris Vujčić to Be Re-Elected as Central Bank Governor

ZAGREB, July 11, 2018 - The parliament's Elections, Appointments and Administration Committee and Finance and State Budget Committee on Wednesday supported by a majority vote the proposed candidates for the leadership of the Croatian National Bank (HNB).

Friday, 18 May 2018

Bank System to Remain Stable Regardless of Agrokor Outcome

ZAGREB, May 18, 2018 - Croatian National Bank (HNB) Governor Boris Vujčić said that even if a solution is not reached in the ailing Agrokor food and retail conglomerate, the banking system will remain stable and banks well capitalised.

Thursday, 17 May 2018

Croatia’s GDP to Grow Less Than 3%

ZAGREB, May 17, 2018 - Croatian National Bank (HNB) governor Boris Vujčić said on Thursday he expected GDP to grow less than 3% this year and the next, that structural reforms remained necessary, and that technological development could markedly reduce economic problems caused by demographic trends.

Thursday, 22 March 2018

Central Bank Governor Presents Semi-Annual Reports

ZAGREB, March 22, 2018 - Croatian National Bank (HNB) governor Boris Vujčić said in Parliament on Thursday that it was difficult to find anywhere in the world a crisis that could be compared to the one in the Agrokor conglomerate, stressing however that although the crisis had not significantly affected Croatia's economy, it was necessary to make undermining the financial stability punishable under law.

Saturday, 3 June 2017

Croatian National Banks Expects Lower GDP Growth Due to Agrokor Crisis

HNB Governor Vujčić expects up to 0.4 percent lower GDP growth this year due to the Agrokor crisis.

Thursday, 4 May 2017

“Agrokor and Political Crisis Will Not Have Major Economic Effect”

Governor of the Croatian National Bank Vujčić comments on economic effects of latest events.

Monday, 23 January 2017

Croatia Planning to Enter Eurozone as Soon as Possible

While many wonder whether eurozone will survive, Croatia is preparing plans to join it.

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