November the 27th, 2022 - As we head towards the final month in which the kuna will remain the country's official currency, many Croatian exchange offices are counting their final few weeks of business operations. Many will close their doors forever as of January 2023.

As epodravina/Sonja Badalic writes, as of the first day of 2023, the kuna will be sent to the history books with so many of the other pre-euro currencies which were once legal tender in the Eurozone. Euros will then take their place in our wallets, bank acounts, and of course - in our sock drawers. The euro is currency that we've all had dealings with by now, but still to a lesser extent, purchasing them only when going abroad.

Despite the fact that the kuna is tied to the euro in many ways, the withdrawal of the kuna from circulation will bring with it numerous changes for this country. While there is constant talk about whether the introduction of the euro will bring new price increases with it, an increase in wages or perhaps less volatile, more favourable loans, it is rarely mentioned that with the disappearance of the kuna, very many Croatian exchange offices will also close their doors for the very last time. In continental Croatia, more specifically in Koprivnica, we're talking about two Croatian exchange offices whose owners and employees are now in their final month of conducting business.

Nino Juric, the owner of the Marko exchange office in Koprivnica, is closing his doors after 23 years.

''We opened on November the 29th, 1999, and now we'll be putting the key in the lock almost on the anniversary. There are currently three of us employed here. My wife, me and another guy to who we're going to need to say goodbye to. Fortunately, he's already found a new job, but the two of us still don't know what we're going to do. First, we will dismantle the branch office, and then we'll take a short break to think about things. We'll certainly start something new, although we aren't yet at clear terms when it comes to which direction we'll go in,'' says Nino.

''When we started working, there were still German marks and Austrian shillings in circulation. The euro came to be only in 2002, and with its introduction, there were rumours about a possible switch from the kuna, which would have seen us close much sooner, so it's nothing new. We heard about it and we've discussed it for years, there was constant speculation about whether or not it would happen and now, unfortunately for us, the date is known and that day is getting closer and closer. No one is forcing us to close, but it simply doesn't make sense to do business without the kuna, because everyone who comes to us has kuna or euros.

Sometimes, but very rarely, someone asks for dollars, while there's really no demand for other currencies. As a result, our business loses its meaning and we aren't going to just sit here for days on end without work. For the minute, we're calm, we've mentally prepared for the fat that an era of our business journey is coming to an end,'' says Nino, who thinks that it's not exactly the right timing for Eurozone accession due to ongoing inflation and the war in Ukraine causing continued economic issues.

People have been changing more money lately, they've been buying euros, so now there are none left, there's a shortage, we have kuna, but nobody wants that anymore. Croatian exchange offices have always done solid business, they worked non-stop, especially during Christmas, and during the summer months, when Croatian people return home from Germany,'' says Nino, adding that Croats, especially the older generation, are quite distrustful of banks, so they prefer to come to the exchange offices and buy at a higher price.

With Eurozone accession rapidly approaching, the very many Croatian exchange offices dotting the streets throughout the country will become a thing of the past.

For more, make sure to check out our dedicated lifestyle section.

November the 22nd, 2022 - The European Union (EU) average when it comes to companies being placed in serious jeopardy because of poor financial discipline is higher than the Croatian one, but that doesn't mean that Croatian companies aren't also finding themselves in hot water more often than they should.

As Poslovni Dnevnik/Suzana Varosanec writes, almost two out of three companies operating within the European Union (EU) believe that customer payment discipline will worsen in the coming period, according to the thirteenth representative EOS survey entitled "European payment habits", in which 3,200 companies spanning sixteen different European countries, including those operating here in the Republic of Croatia, were examined.

When it comes to Croatian companies, however, things are (quite surprisingly) a little bit more optimistic than the European Union average; namely, only one in three out of four Croatian companies currently predicts a worsening of payment discipline, and as they state, a quarter of them even believe that it will improve. In comparison, back in the very successful pre-pandemic year of 2019, every other company operating in this country held the opinion that improvement was around the corner.

"Although it's less than the European Union average, the fact is that as of 2019, almost twice as many Croatian companies, based on experience, estimate the deterioration of their payment habits, while there are also significantly fewer who believe that they will improve. This is a clear indicator of future trends, given the current economic figures and high inflation," said Barbara Cerinski, the director of EOS Matrix.

Otherwise, payment habits across Europe have worsened quite significantly over the last three years, as was confirmed by this research, which points out that the above-mentioned development is causing approximately one in five companies to suffer legitimate fears for their own existence.

For more on Croatian companies, startups and entrepreneurs, make sure to keep up with our dedicated business section.

November the 16th, 2022 - One Croatian project is in the running for the title of best European project as we approach the marking of the anniversary of the Regiostars award.

As Poslovni Dnevnik writes, the European Commission (EC), the executive body of the European Union (EU), will mark the fifteenth anniversary of the establishment of its popular Regiostars award on Thursday in the Portuguese city of Evora. The Regiostars award works to promote projects co-financed by EU funds.

At the ceremony, the European commissioner, Portuguese Elisa Ferreira, will present a special award to one of the projects that has already been awarded since the establishment of "Regiostars" back in 2008. Among the fifteen candidates, who could be publicly voted for until Tuesday on the Regiostars website, is the Croatian project, e-school.

With it, 151 primary and secondary schools across the country received IT equipment and digital teaching aids, which accounted for 10 percent of all schools across the Republic of Croatia. The initiator of this pilot project is CARNET, a public institution that operates in the field of information and communication technology in this country.

Back in pandemic-dominated 2020, this Croatian project received the "Regiostars" award in the Belgian capital of Brussels, based on votes collected over the internet. Previously, CARNET had applied for that tender. With its cohesion policy, the European Commission tries to reduce inequalities between different parts of the EU, so through funds filled with taxpayers' money from 27 member states, it co-finances projects in the maximum amount of 85 percent. The rest is provided by the member states in which the projects themselves take place.

In the elementary school in Velika Ludina, which is around 30 kilometres from Sisak, students solve math problems on tablets and the smart board in the classroom gives the correct answers by itself.

"Just a decade ago, things looked completely different. If the professor wanted to visualise something, he had to be good with chalk and a blackboard, and the students learned exclusively from books," said Croatian journalist Boris Abramovic, the author of a five-minute film about the Croatian project that will be presented in Evora.

"In just seven years, the classic classroom has turned into something that the previous generation only saw in science fiction movies," adds Abramovic about that school in the north of Croatia. Damir Belavic, the professor of mathematics in the school in question in Velika Ludina, says that he himself has an "online notebook".

"Students have online notebooks, so even those who aren't at school can follow what is being done. On top of that, everything remains stored in these notebooks, so it's easy for me to distribute materials to students. I direct them to various links and we do various online exercises,'' he explained.

Classic paper notebooks, however, are still used. Juraj Bilic, the deputy director of CARNET, says that this Croatian project proved to be successful, but that it is not finished yet and more plans are in the works.

For more, make sure to check out our dedicated news section.

October the 26th, 2022 - With Croatian Eurozone entry looming, more and more kuna cash is appearing in bank accounts having made its way there from sock drawers and under mattresses. How much of it is legitimate, however? With many of these amounts not exactly being small, these deposits might well attract the taxman's unwanted radar.

As Poslovni Dnevnik writes, as RTL has learned from the Croatian Association of Banks (HUB), back in June this year, household deposits reached 255.2 billion kuna, in July they rose to 259.6 billion kuna, and according to the latest Croatian National Bank (CNB) data, they rose to 263.4 billion kuna this August.

When compared to the same month last year, at least according to the Croatian National Bank, this is an increase in deposits of this kind by 22.3 billion kuna or 9.4%. Peoples' deposits have been growing rapidly for a couple of years already, meaning the growth of deposits was similar a year earlier compared to 2020, when they grew by 20.7 billion kuna or 9.2%. People in this country typically deposit far more foreign currency than they do kuna cash, so the share of foreign currency deposits was 59.4% or 156.5 billion kuna, while the share of kuna cash savings and stood at 7.1% or 18.9 billion kuna.

In this way, some of the money that has been under the radar until now will surely end up being deposited into various different bank accounts. If a larger amount appears on someone's account, the spotlight might well be switched on and the bank's due diligence and analysis procedures will automatically be activated. On top of that, there there is also the Law on the Prevention of Money Laundering and the Financing of Terrorism, which also prescribes which alarms need to be raised and when.

"Measures of in-depth analysis should basically ensure that banks get to know their clients and the transactions being carried out in detail, and include establishing the identity and verifying the identity of the party, collecting data on the purpose and intended nature of the business relationship, and carrying out the constant monitoring of the business relationship", they stated rom the CNB.

If an amount greater than 200,000 kuna appears in someone's account all of a sudden, regardless of who is carrying out that cash transaction, the bank is also obliged to collect information on the source of the funds.

For more, make sure to keep up with our dedicated news section.

September the 7th, 2022 - Croatia is among three EU member states (the other two being the Republic of Ireland and Romania) with the fastest growth of loans being granted to companies.

As Poslovni Dnevnik/Ana Blaskovic writes, this year, specifically from February onwards, a strong growth in lending has been noticeable, and after a long period of stagnation (or in some cases decline), Croatia has once again entered a period in which loans being granted to companies outnumber those being given to households, the Croatian Association of Banks pointed out in its HUB Pregledi publication.

They noted that the annual loan growth back during the month of May this year actually exceeded the double-digit threshold for the first time and has since continued its upward trajectory.

"According to the latest data for the month of July, when the amount of net loans exceeded 100 billion kuna for the first time in eight entire years, growth stood at 16.1 percent. Along with Ireland and Romania, Croatia is among the three EU member states with the fastest growth in loans provided to companies in July," they stated from the Association of Banks.

Some assessments consider it unfounded that behind the generous lending of companies there is only the motivation to finance old loans while there is still a period of historically low money prices ahead of the announced tightening of monetary policy.

"It's well known that the European Central Bank started increasing interest rates back in July 2022, which will continue with the aim of suppressing inflation, but bearing in mind the expected increase in interest rates in the next year, it's only logical that some companies are trying to contract more favourable financing conditions in the long term. However, it is a question of net credit growth, i.e. an increase in credit activity on top of usual refinancing,'' they pointed out, adding that more active loan support is correlated with economic growth, which stood at an encouraging seven percent in the first quarter and accelerated to 7.7 percent in the second.

During this year, companies operating in Croatia primarily wanted to get their hands on business loans. In July, their growth reached as much as 21.5 percent on an annual basis. Loans for investments also grew at a double-digit rate, 12 percent, while other loans to companies increased by 6.1 percent.

From the Croatian National Bank (CNB), as was written back at the beginning of this summer, they see part of the reason for the unprecedented corporate demand in the increased needs of companies operating in the energy sector due to the huge explosion of costs. In July, loan demand was led by large companies in Croatia with 20.4 percent growth. They were followed by micro companies with 15.3 percent, medium-sized companies with 8.8 percent and small enterprises with 7.4 percent. Regarding loans for investments, the order is similar; the fastest growth was recorded in the large ones by 27.1 percent, and in the smallest ones by 15.2 percent.

"As such, Croatia has once again entered a period in which loans to companies grow faster than loans to households do. Such a relationship for a period of more than four months was last recorded back in 2016," HUB notec.

In addition to the economy, household lending also grew, albeit more slowly, by 5.2 percent during the month of July. The Association of Banks added that lending to the economy exceeds inflation, but the same is not true for people and household loans. The rate of increase in household loans in Croatia still remains below inflation, as does the growth of nominal wages (7.5 percent in July), resulting in the continuation of the decline in (real) indebtedness of that segment. At the same time, housing loans are growing at a rate of 9.4 percent, and cash loans are growing at a rate of 2.8 percent.

"This means that the contribution of loans to the financing of current consumption is minimal. Moreover, credit card loans are on the decline, and overdrafts on current accounts and other loans to households, although they recorded growth during this year, are at lower levels than the average for the period from 2018 to 2020," HUB stated. They also added that the different rate of growth of deposits and loans should be weighed up since deposits have been strongly accelerating since 2020 with expectations of a continuation of the trend after the tourist season and ahead of the conversion to the euro on the first day of 2023.

For more, make sure to check out our dedicated politics and business sections.

August the 16th, 2022 - Numerous adaptations of Croatian laws are coming into force as Eurozone accession draws closer and closer, set to take place on the 1st of January, 2023.

As Poslovni Dnevnik writes, due to the imminent introduction of the euro as Croatia's official currency, numerous Croatian laws are being adjusted, the changes of which require to be put through at an urgent procedure due to quickly approaching deadlines.

Over the coming days, the draft proposal for changes to the Law on Value Added Tax will be publicly discussed, and in addition to the provisions that are being changed due to the switch to the euro, the already announced extension of the application of a reduced VAT rate, which should alleviate inflationary pressures and the negative impact on growth, is included in the same package. The latter should have a positive influence on the price of energy and the standards of people and of the overall economy.

At a rate of 5 percent, the supply of heating from thermal stations with accompanying fees, as well as the supply of firewood, pellets, briquettes and wood chips will be taxed in the period from the entry into force of the amendments to the Act until March the 31st next year.

When it comes to changes in the Croatian laws directly related to the imminent introduction of the euro in January, adjustments related to, for example, the threshold for the acquisition of goods within the European Union (EU), the threshold for registration in the register of VAT payers, the value of deliveries up to which a taxpayer can be a quarterly VAT payer and similar items are implied.

As part of the assessment of the effects of the legal changes, which the Ministry of Finance forwarded to the e-consultation, it has been stated that "it isn't possible to predict the timing of the full achievement of the outcome, but certain effects in the form of easing price increases are expected after the entry into force of the proposed provisions.''

By extending the application of the reduced VAT rate, enterprises who supply the aforementioned energy products will be taxed at a flat 5 percent rate, with the fact that they will need to independently decide how to direct the difference caused by the reduced rate.

"Since companies are free to set their own market prices, there's a possibility to maintain the same price levels we've got now," the explanation stated.

For more, make sure to check out our dedicated politics section.

July the 19th, 2022 - Croatian euro coin production has officially kicked off as the country's accession to the Eurozone rapidly approaches, marked out on the calendar to take place on the 1st of January, 2023.

As Poslovni Dnevnik writes, on Monday the 18th of July, 2022, Croatian euro coin production finally began at the Croatian Mint in Sveta Nedelja near the City of Zagreb, and Prime Minister Andrej Plenkovic (HDZ) and Governor of the Croatian National Bank (CNB) Boris Vujcic both attended the ceremony marking the start of production as Croatia's entry into the Eurozone draws ever closer and the final loose ends are tied up.

The whole Croatian euro coin production process looks really impressive, six presses are currently working in the Croatian Mint in Sveta Nedelja, where they can produce between five and eight hundred coins per minute. The daily capacity of the factory itself is a massive four million coins, and about seventy employees are working on the rollout of these brand new coins in time for the official change over the the bloc's single currency next year in three shifts, as reported by HRT.

It is interesting to note that the plates for the coins themselves are procured in other European countries, through various tenders, and the tool intended for the Croatian euro coin production was produced right here in the Republic of Croatia.

As we approach the beginning of Croatia's membership of the Eurozone and the Croatian national currency (kuna) spends its final few months in circulation as legal tender, people will be able to purchase the new Croatian euro coins themselves as of December the 1st, 2022, while the Croatian National Bank (CNB) will be supplying the country's banks beginning in October.

For more on the countdown to Croatian Eurozone membership and other politics stories, make sure to check out our dedicated politics section.

July the 17th, 2022 - All hands are firmly on deck with employees having to work hard in three shifts to make sure the new Croatian euro coins are going to be ready by the end of this year for the official introduction on the first day of 2023.

As Poslovni Dnevnik writes, the governor of the Croatian National Bank (CNB), Boris Vujcic, recently said that the current crisis we're in due to rising inflation and the ongoing war in Ukraine best illustrates the advantage of the Republic of Croatia finally joining the Eurozone.

"The markets already know this, they know exactly what the exchange rate will be here in Croatia, and because of that, we didn't even see any pressure on the weakening of the kuna, nor did we have to intervene or raise our interest rates. Other European Union (EU) member states that are not part of the Eurozone, such as Hungary, Poland, the Czech Republic and others, have already experienced pressure on their own respective currencies and interest rates, which are rising very strongly, which spills over into the home loan and business loan market, while in Croatia, they're thankfully still at a historic low,'' explained Vujcic

''If we weren't set to officially join the Eurozone, the situation would be different in this country,'' he noted.

The governor also announced that the minting of Croatian euro coins will start on Monday. The process, as he said, is logistically demanding, because Croatian euro coins all need to be minted by the end of this year, and it will have to be done in three shifts.

"We're on the verge of minting all of the Croatian euro coins," he said, adding that the second major demand will be the withdrawal of the current kuna banknotes from use.

''As for the conversion from the Croatian national currency to euros, it will be automatic from January the 1st, 2023, and all loans that aren't in euros will remain at the exchange rate that had already been established. Those who have loans with a fixed interest rate will see everything remain the same as it was when the kuna was being used, and those who have a variable rate will see it adjusted in such a way that the consumer doesn't end up in a worse position after the conversion than they were before it,'' he explained.

''Consumers are going to remain in the same situations as they were before,'' assured Boris Vujcic.

For more, make sure to check out our dedicated politics section.

July the 16th, 2022 - Croatian secret shoppers chosen by the Economy Ministry are out on the field monitoring the rollout of dual pricing in the country's stores as Eurozone accession rapidly approaches.

As Poslovni Dnevnik writes, after the EU Council formalised the decision to introduce the euro as the official currency in the Republic of Croatia a mere four days ago, the Economy Ministry announced a group of Croatian secret shoppers who will monitor the situation for the sake of consumer protection during the transition to the new currency.

The competition held back in the spring selected six candidates from different parts of Croatia, who, in mid-August will start monitoring precisely how the prices of goods and services are recalculated out in the field during the mandatory dual pricing rule which is set to come into force in September 2022. Some stores, including large chains like Konzum, have already begun displaying their prices in this way.

The selected Croatian secret shoppers are from the Medjimurje Consumer Society and the Consumer Protection Development Organisation from Selnica in Medjimurje County, the Consumer Education and Information Centre from Bilje in Osijek-Baranja County, the Croatian Consumer Protection Association from Zagreb, the Consumer Rights Protection Association from Split, and the Association Consumer Centre from Rijeka.

How will it work?

Over the next thirty days, these Croatian secret shoppers will conclude a contract in which they will receive 112 to 120,000 kuna for their mystery shopping activities, and they will monitor and obtain consumer information until the end of next year, by which time the obligation of dual price reporting will be in full force and will have been for some time.

The plan is for the engaged associations to monitor price movements and the correctness of price recalculation and rounding on a monthly basis by reviewing 50 to 60 different goods and services, at a minimum of 10 points of sale and five points where various services are provided in exchange for money. The associations that have been selected as Croatian secret shoppers have the obligation to publish the results they've obtained regularly, more precisely by the 15th of each month, on their websites.

The plan is also for the situation on the ground to be checked by five people who will be hired by selected associations, and the tours should include, in addition to retailers, fuel stations, butchers, bakeries, as well as service providers such as hair salons and catering and hospitality facilities. For two hours, associations must also provide open telephone lines where consumers will be able to get information from them about those facilities who are wrongly trying to take advantage of the situation and make a profit.

Croatian secret shoppers will soon be placed in banks, as well...

It won't only be stores and other facilities under the radars of Croatian secret shoppers, banks won't be immune either. The Croatian National Bank noted that it will hire secret shoppers, or perhaps in this case it's better to call them secret clients, in order to monitor what practices are being carried out at bank counters, as well as at other credit intermediaries under its authority.

For more, make sure to check out our dedicated lifestyle section.

July the 15th, 2022 - The huge Croatian shopping chain Konzum is set to begin showing the prices of the items on their shelves in both kuna and euros as Croatian Eurozone accession rapidly approaches.

As Poslovni Dnevnik writes, starting this week, Konzum will proactively start with the dual display of prices for products and services in both kuna and euros, and in this way, even before the official obligation on the dual display of prices comes into force on September the 5th, 2022, all customers shopping in Konzum's stores will have an insight into the prices of products and in the new currency that the Republic of Croatia will officially introduce on the first day of 2023.

All items on Konzum's ample shelves will have their prices expressed in both Croatian kuna and euros and a fixed conversion rate amount of 7.53450 kuna to the euro, and the change of all labels in Konzum's more than 600 stores will be done by the end of July.

The double display of prices even before the legal obligation is a continuation of the company's wider policy of open and transparent relations with its customers. One of the similar examples of this was Konzum's price reduction of over a thousand items back in February of this year in accordance with the decision of the Croatian Government to reduce VAT, and it was the first retail chain in all of Croatia to do so even before the decision came into force in April.

"A transparent relationship with our customers is imperative for our business, on the basis of which we earn and strengthen their trust day by day. We always strive to be open in everything we do, including in this challenging period of the introduction of the euro. We started with the preparations on time and our employees are ready to continue with all the stages of implementation of these historic changes in order to help our customers adapt to the transition to the country's new currency as easily as possible,'' said Zoran Mitreski, President of Konzum's Management Board.

The entire process of introducing the euro in Croatia is being divided into three phases, and Konzum has been monitoring each of them with its own activities. The first one refers to the display of dual prices and a fixed exchange rate, the implementation of which Konzum has already begun. Double prices will be displayed until December the 31st, 2023 on all products on sale in all Konzum stores, including on the online store. Prices in both currencies will be displayed throughout the entire process of selecting and purchasing items – on the store shelves, in online shopping carts, during the checkout process and during an order confirmation when purchasing goods online, as well as on all issued receipts.

The second phase will begin on January the 1st, 2023 with the official introduction of the euro in Croatia, and it is important to note that it will remain possible to pay in kuna until January the 14th of the same year, with refunds being given only in euros.

The third phase refers to the period from January the 15th, 2023, when the euro will be the only currency with which customers will be able to pay in Konzum's stores.

For more, make sure to check out our dedicated business section.