Thursday, 30 June 2022

PM Says Government Systematically Making Strategic Headway For Prosperity Of Citizens

ZAGREB, 30 June 2022 - Prime Minister Andrej Plenković said on Thursday that the government was "very systematically making strategic headway" to improve the lives of citizens and the economy, referring to Croatia's admission to the euro area and the Schengen Area, as well as to the upgrade of the country's credit ratings.

At its last summit, the European Council confirmed Croatia's entry into the euro area on 1 January 2023, and the government expects that Croatia will also join the Schengen area then too.

"We are very systematically making these strategic steps forward for the prosperity of our citizens and economy. They (that headway) are here, they will last, they will remain, and they will be a kind of legacy of the two terms of our government," Plenković said at a cabinet meeting.

"These are really great strategic achievements. They do not just come with some routine schedule. They come on the basis of the implementation of reforms, the fulfillment of benchmarks, the adoption of laws, and our political and diplomatic engagement," he added.

The Moody's agency has recently announced that it could raise Croatia's credit rating to the investment category following the EU's recommendation for Zagreb's entry into the euro area.

Croatia's current rating of 'Ba1' signals investors that the agency considers the purchase of Croatian government bonds a speculative investment.

Last Friday Moody's announced that it will raise Croatia's rating by two levels, to 'Baa2', investment category.

Plenković said that Croatia will have the best credit rating so far in the investment level, according to the assessments of all the three largest global credit rating agencies.

"We are sending a message of confidence to financial markets, investors, partners (...) There will be many more such positive messages. Only now will we appear on the radar of some serious stakeholders on the market since we have been given a sort of tick from all three agencies," he underscored.

Council's conclusions on BiH call for limited constitutional and electoral law reforms

Commenting on the conclusions of the last European Council on the possible candidate status for Bosnia and Herzegovina, Plenković said that the Croatian initiative included the wording that the European Council is ready to give BiH candidate status if it meets reforms in 14 areas, including limited constitutional and electoral law reforms. They "should address the issue of the inequality of Croats as the least numerous constituent people in the country among other things, said the PM underscoring that Zagreb has been systematically advocating the BiH Croats' rights for years.

Plenković also commented on a decision at the NATO summit in Madrid to give the green light for Swedish and Finnish membership in NATO.

He said he was "glad" that President Zoran Milanović agreed with the government's position, who had previously said that it was necessary to block the Swedish and Finnish request for NATO membership until the election law in BiH was changed.

A proposal on initiating the procedure for concluding a protocol to the North Atlantic Treaty on the accession of Finland and Sweden to NATO was adopted during Thursday's cabinet meeting.


For more, check out our politics section.

Thursday, 16 June 2022

Eurogroup Recommends Croatia's Accession To Euro Area

ZAGREB, 16 June 2022 - The Eurogroup, a body that brings together the finance ministers of the euro area member states, on Thursday made a positive recommendation for Croatia's accession to the euro area on 1 January 2023.

"I am very pleased to announce that the Eurogroup agreed today that Croatia fulfils all the necessary conditions to adopt the euro. This is a crucial step on Croatia’s path to become the 20th member of our euro area and a strong signal for European integration," Eurogroup President Paschal Donohoe said.

"I want to pay particular tribute to the Croatian government for its commitment and hard work to achieve this result over the past few years, in particularly challenging circumstances," he added.

The recommendation was sent to the Economic and Financial Affairs Council (ECOFIN), which consists of the finance ministers of the 27 EU member states.

ECOFIN is expected to adopt the Eurogroup's recommendation and endorse a letter from the ECOFIN president to the European Council at its meeting in Luxembourg on Friday. The European Council is due to discuss the matter at its meeting on 23-24 June.

The process will conclude with the adoption by the Council, after it has consulted the European Parliament and the European Central Bank, of three legal acts that are necessary to enable Croatia to introduce the euro on 1 January 2023. The adoption of these acts is expected to take place on 12 July.

The finance ministers share the opinion of the Commission and the European Central Bank that Croatia is legally compatible and compliant with all the convergence criteria and consider that Croatia meets the necessary criteria for euro adoption, according to the draft letter which will be sent to the summit of EU leaders.

The draft letter notes that it is important that, after entering the euro area, Croatia should continue to meet the obligations undertaken two years ago when entering the European Exchange Rate Mechanism (ERM II).

Croatia is invited to implement further structural reforms and investments under the National Recovery and Resilience Plan and pursue a sound fiscal policy.

For more, check out our politics section.

Thursday, 2 June 2022

HNB Governor Says Euro Area Entry To Increase Croatia's Resilience To Crises

ZAGREB, 2 June 2022 - Euro area entry will boost Croatia's resilience to crises and external shocks and bring multiple benefits for its citizens and economy, Croatian National Bank (HNB) Governor Boris Vujčić said in a joint statement after meeting with European Commission Vice President Valdis Dobrovskis on Thursday.

The meeting was prompted by a convergence report issued by the EC and European Central Bank (ECB) on Wednesday, assessing that Croatia is ready to introduce the euro.

Vujčić told reporters that the EC's positive assessment of Croatia's compliance with nominal convergence criteria makes Croatia just a step away from euro area entry.

"We embarked on that road in 2017 and now we are completing the journey," he said, adding that this would mean a lot for Croatia and that the benefits of euro introduction would be much greater than the costs, both for citizens and for businesses.

Euro area entry will make Croatia much more resilient to the recent numerous shocks and crises, he said.

"It is definitely better to be in the euro area in the current time than outside of it," he said.

After Croatia joins the euro area, the HNB, too, will become fully integrated in the euro system and become part of it, he said, recalling that in October 2020 the HNB established close cooperation with the ECB, and that it was waiting for the final step of integration with the euro system.

Vujčić said that entry into the area of the world's second most important currency would mean progress for Croatia.

As for the technical aspects of conversion to the euro, specifically the operation of ATMs in the transitional period, the central bank's governor said that by 31 December most ATMs would be filled with euros and that by 15 January all would be filled with euros. Some of the ATMs will be filled with kuna in the transitional period but everything will be done to make the transition easier for citizens, he noted.

Asked if now was the best time to introduce the euro considering the global crisis, Vujčić said it would have been better if Croatia had already entered the euro area.

"Joining the euro area as soon as possible is the best, this is the best moment we can have. That is evidenced, in my opinion, by the ECB's support already at the start of the crisis caused by the coronavirus pandemic, which would not have been possible had we not been very close to entry to the exchange rate mechanism. That helped us overcome the pandemic crisis more easily," he said, adding that unlike most EU countries that are not euro area members and where interest rates have grown significantly since the start of the Ukraine war, in Croatia interest rates are the same as before.

EC Vice-President Dombrovskis congratulated Croatia on what he described as a historic achievement, noting that the country had met all the relevant criteria and that it was expected to join the euro area on 1 January 2023.

He said that the EC would continue cooperating with Croatia and the HNB.

Euro area entry is important because the whole world has been affected by the crisis caused mostly by the war, which is why it is important to join the part of Europe that uses the world's second strongest currency. That will help Croatia in many financial aspects, among other things, with lower interest rates, the EC official said.  

For more, check out our politics section.

Friday, 6 May 2022

Prime Minister Says Euro Area Membership Is a Plus in Crises as Serious as Current One

ZAGREB, 6 May (2022) - Prime Minister Andrej Plenković said on Friday that euro introduction would be positive for Croatia and would enable it to weather challenges better and more easily.

Opening a government session, the PM said that the National Council for euro introduction held a session on Wednesday, stressing that he expected the parliament to adopt the relevant law.

"I believe that membership in the euro area is a benefit in a crisis as serious like the current one, and that it will help us weather the future challenges better and more easily," he said.

He said the government would also formulate changes to the Government Act, announced at the start of the second term.

"We will propose, as one of the measures to step up the fight against corruption, stripping of immunity any government member for crimes of corruption that are prosecuted ex officio," he said.

He added that the government would also formulate a code of conduct for government officials.

For more, check out our politics section.