Thursday, 21 July 2022

Businesses Urged to Adopt Euro Changeover Ethical Code

ZAGREB, 21 July 2022 - Businesses should adopt the euro changeover code of ethics and in the current circumstances no business should make "profiteering and speculative" moves, Prime Minister Andrej Plenković and Economy Minister Davor Filipović said on Thursday.

Presiding over the 16th session of the national council for adopting the euro as the official currency, Plenković said this was the first session since the final EU decision on Croatia's accession to the euro area on 1 January 2023.

In the final stage of introducing the euro, all mechanisms should contribute to creating a secure environment for consumers, which means that businesses should accede to the ethical code, he said.

In circumstances of inflationary pressures, he added, no business should make moves that are "profiteering and speculative and that are not in line with the moment and broad social responsibility."

"All actors in society must now show an element of social responsibility," Plenković said, adding that everyone must "understand that we must overcome the crisis together."

Adopting code of ethics as of 16 August

Presenting the code of ethics published last week, Filipović said it should contribute to a secure environment for consumers and to correctly converting and displaying prices, without unduly raising them.

It is intended for all financial and non-financial businesses doing direct business with consumers. Adopting the code is free and voluntary and will be possible via app from 16 August until the end of 2023. Filipović called on all businesses to adopt it.

As of 5 September, when prices must be displayed in both kuna and euro, citizens will be able to commend or complain via app about businesses that have not adopted the code, he said.

Croatia joining the world's most developed countries

Plenković said the accession to the euro area, to coincide with accession to Schengen, meant that Croatia was joining the most developed countries in the world and the EU.

Central bank governor Boris Vujčić said 420 million euro coins would be minted this year and another 230 million in 2023.

He said 350 million euro bills were being procured and that banks, post offices and the Financial Agency would be supplied with bills and coins as of early October, while citizens and businesses would be supplied as of 1 December.

The demanding job of adjusting ATMs will begin in December, Vujčić said. Some will have kuna until the last day of the year, while some will be adjusted so that they can issue euros as of 1 January. As of 15 January, all ATMs should issue euros.

Finance Minister Marko Primorac said 60 laws would have to be aligned in fast track, starting from 25 August.

For more, check out our business section.

Wednesday, 20 July 2022

Croatia in 2027: What Will the Country Look Like in 5 Years?

July 20, 2022 - Life in Croatia is mostly about remembering the past or living in the present, but when it comes to the future, what is it going to be like for Croatia in 2027? An overview of the things that will shape the country in the next five years.

It has been 31 years since Croatia declared its independence from Yugoslavia, 27 since the end of the homeland war, and 11 years since it completed its accession to the European Union. For those who have closely followed the development of Croatia as a country in those years, as well as those who were unaware of it, the feeling of surprise is shared. Objectively, the vast majority of people I know have expressed their amazement at the growth of Croatia when they see my photos and videos on Instagram, or when they read my articles on this portal. Some may consider them clueless, but the truth is that many believed that Croatia was just another country in Eastern Europe, torn apart by war and struggling to recover.

Few imagined that Croatia is currently one of the main tourist destinations in the world, with leading technology companies such as Rimac, or one of the safest countries on the planet. Many countries in the world have also gone through bloody independence processes or intense armed conflicts that have left them on the brink of economic, political, and social abyss. But with a population of no more than 4.7 million in 1995, Croatia's growth and development have been remarkable. Although it is worth mentioning the international support received in the last three decades, the resilience and determination of its population have been indisputable pillars in this process.

The country continues to go through constant changes, and some, in particular, seem to be decisive in speculating on what awaits around the corner. Just as we look back to analyze the evolution of the country, the positive and negative of its present, we ask ourselves, what lies ahead for Croatia in the next five years? We go over a few things to see what Croatia will look like in 2027.

Euro currency

This Monday, Croatia began producing its euro coins, which will enter circulation from January 1, 2023, replacing the kuna. As part of its accession to the European Union in 2011, among the conditions was the eventual change of currency to the euro, and last year the Croatian government announced that it would take place in 2023. Despite a strong rejection by the part of the population, in recent months this change has received the green light from different institutions such as the European Commission or the European Central Bank. Change is inevitable, and today some supermarkets are already displaying the prices of their products in both kuna and euro currencies.


Image: Pixabay

Opinions are diverse. There are those who welcome the arrival of the euro as a way to strengthen economic relations with other powers on the continent, others believe that it will not affect the country in a positive or negative way, and many believe that it will plunge the country into a crisis and radically raise the costs of living. How will Croatia fare in the future with the euro as the new currency? Only a seasoned economist could dare to speculate, but perhaps it is the expectations that matter. In a country plagued by an imbalance between salary conditions and the cost of living, the European Union is expected to require Croatia to match the standards of other member states in the future. Changes in the prices of basic products and services, or the shift from using more coins instead of bills, are considered by many to be minimal changes compared to other macroeconomic trends, but they should still be considered in the first years and in what way it will affect the middle-class Croatian citizen and those mired in poverty.

The comparison is daring, but countries like Italy with the lira, France with the franc, Spain with the peseta, or Germany with the mark, had to go through the process of change that at first was confusing for many, but today, almost twenty years later, it is part of everyday life in those countries.

Schengen area

On June 29 of this year, the Council of the European Union formally initiated the process of admission of Croatia to the Schengen area, currently composed of 26 European countries. In previous years, many political leaders on the continent expressed their support for Croatia joining the Schengen area, and finally this year a vote will take place in October in which 22 member states (with the exception of Switzerland, Iceland, Lichtenstein, and Norway as they are not members of the EU and do not have voting rights) will decide on Croatia's accession. Once approved, Croatia will become the 27th country to access the benefits of such admission, in the same year that it will adopt the Euro as its currency.


Photo: Nel Pavletic/PIXSELL

Should there be no unforeseen obstacles, all kinds of border controls will be lifted in Croatia starting on March 26, 2023, which will simplify travel to and from Croatian airports, sea ports, and land borders. For instance, passengers traveling from Croatia on direct flights to destinations in the member states of this area (26 European countries), after checking in for the flight and security control, will go to the exit for their flight without crossing the border or police control. This change is expected to have a positive effect on tourism trends in the coming years, especially in a country like Croatia, with a large annual presence of visitors from countries such as Slovenia, Germany, Austria, Denmark, Poland, Sweden, and the Netherlands during the summer season.

Croatian trains

Unfortunately, unlike the previous two points, when it comes to the future of trains in Croatia there is still no revolutionary project announced. Although it is true that the sad reality of the trains in the country was already known, in recent weeks various news have been published that make it even more evident. From poor connectivity between cities to excessive travel times, to even drivers who were late for sleeping at home. Bus travel and airports continue to support the local and international transport market in Croatia, but expectations for a better train system are rising with time. Tourists and local users alike expect train travel to be modernized, and soon.

The geography of the country is not an excuse since other rugged countries such as Italy or Austria have most of their cities and towns connected to each other by very fast and modern trains. Time will tell whether Croatia decides to modernize its existing lines in the next few years, or whether it decides to add more trains connecting coastal cities as well as from west to east. At the moment there is no clear horizon, but it is an urgent issue.


Photo: Nikola Cutuk/PIXSELL


The most recent census was conducted last year, and the results raised a lot of eyebrows. Much has been said in the last decade about the never-ending phenomenon of migration of young Croatian professionals in search of better job opportunities in other countries on the continent, or even outside Europe. However, the situation seems to have worsened even more and this has been manifested in the last official count of the country's population. The youth of the country continue to look abroad once they receive their degree, and there are plenty of reasons considering the low wages and the limited job offers. 

Some blame the ease for Croats to migrate to other European countries due to their membership in the EU, but the truth is that it is becoming increasingly difficult to convince a Croat to stay.


Photo: Borna Filic/PIXSELL

If the cost of living in the country manages to find a balance over time with salaries, labor supply, and working conditions, it is likely that the trend will reverse, but for now one can only speculate. On the other hand, it is important to recognize the increase in Croatian citizenship applications by citizens who belong to the Croatian diaspora, especially those who come from South America. The current situation in several countries of the South American continent, such as Argentina or Peru, has motivated young people and adults to bet on a change of scenery, with a great willingness to take on the challenge of repatriation and offer their skills in Croatia. It has always been talked about how it is that the majority of the Croatian population lives, in fact, outside the country, but this factor must be seriously taken into account in the coming years, which would also invite us to think about a more diverse Croatian population.


The COVID-19 pandemic has made many in the country reflect on the enormous dependence of the Croatian tourism industry on international flights. Everyone involved in the tourism sector was deeply affected: hotels, restaurants, tour agencies, tour guides, private accommodation owners, transport companies, and more. Likewise, citizens who dedicate themselves entirely to tourism have felt a severe blow to their own economy, realizing that those two or three months of income should not be so essential for them in order to survive the other nine months of the year. The name of the game for the next few years is diversification. 

The public and private sectors have to come together to look for alternatives, even if a chance of another pandemic is unlikely. Istria, for example, showed the importance of being a destination that can be reached by car. Likewise, it is necessary to bet on tourist offers during the winter, especially in a country that boasts good weather and cultural events throughout the year. This and more will help the country stop depending so much (and dangerously) on the summer months.


Photo: Grgo Jelavic/PIXSELL

Another issue to consider is overcrowded tourist destinations during high seasons, such as Split or Dubrovnik. While it may not sound like much of a concern to those in the tourism industry, the truth is that at the end of the day, tourism is all about experiences. The experience of not being able to walk down an alley in the old town, not having a place to lie down on a beach, not finding an available table in a restaurant or exaggerated accommodation prices can only be a negative and will affect the promotion of the country in the short term, if they are not already doing so. Limiting the arrival of cruise ships, regulating private accommodation, and promoting other tourist destinations more strongly should be some of the goals that the tourism industry, both in the public and private sectors, should set for improving the quality of the tourist experience in Croatia in the next years.

For more news about Croatia, click here.

Tuesday, 12 July 2022

Website With Information About Euro Adoption Launched

ZAGREB, 12 July 2022 - The Croatian government and National Bank (HNB) on Tuesday activated the website with all necessary information about the euro adoption as soon as the European Union's Ecofin completed the process of decision-making on welcoming Croatia to the euro area on 1 January 2023.

The website will be updated on a regular basis.

The HNB says that the general public, businesses, media outlets, and all interested parties can access the website to get information about the determined conversion rate of the kuna for the euro, dual display of prices, motifs of the euro coins minted in Croatia, the image of the euro banknotes and deadlines for the replacement of kuna banknotes and coins with the euro, and consumer rights in the changeover process.

For more news about Croatia, click here.

Sunday, 10 July 2022

Ecofin to Make Final Decision on Croatia's Entry into Euro Area on Tuesday

ZAGREB, 10 July 2022 - The Economic and Financial Affairs Council for EU (Ecofin) convenes on Tuesday to adopt the final three legal acts which will enable Croatia to introduce euro as its currency on 1 January 2023.

One of those three acts concern the decision on the adoption of the euro by Croatia.

Also the amendment will be adopted to the provision whereby the 19-member euro area will welcome Croatia as its 20th member. Currently the euro area has more than 340 million inhabitants and is the second strongest economy globally. The euro zone accounts for 15% of the global GDP.

And, the third legal act concerns the fixing of the conversion rate of the kuna for the euro.

The outgoing minister Zdravko Marić will attend the Ecofin meeting in Brussels for the last time in his capacity as the Croatian minister of finance after he recently resigned from the government.

Deeper integration

Entering the euro area is one of the remaining two strategic goals for Croatia's deeper integration in the European Union. The other goal is the country's admission to the passport-free Schengen Area, and the decision to this effect is likely to be adopted in September.

As a result, Croatia is to complete its deeper integration into the EU in 2023, ten years after it joined the European Union.

Croatia's fulfillment of all convergence criteria for euro area

On 16 June 2022, the Eurogroup endorsed the positive convergence assessment of Croatia, agreeing that Croatia has fulfilled all convergence criteria required to join the euro area, proposing that Croatia should introduce the euro on 1 January 2023.

The Eurogroup's move ensued after on 1 June both the European Commission and the European Central Bank (ECB) issued the convergence reports informing the EU Council about the progress made by Member States towards achieving the criteria for joining the euro area.

One of the four criteria is price stability.

Furthermore, the aspirant is expected to have sound and sustainable public finances which means that the country should not be under the excessive deficit procedure.

Also, exchange-rate stability is one of the criteria and under this criterion the country has to participate in the Exchange Rate Mechanism (ERM II) for at least two years, without strong deviations from the ERM II central rate and without devaluing its currency's bilateral central rate against the euro in the same period.

And finally, long-term interest rates are included in the criteria, which should not be higher than two percentage points above the rate of the three best-performing member states in terms of price stability.

In both reports on 1 June, Croatia received a very favourable assessment: not only did Croatia meet all the criteria, but the sustainability of its convergence has been assessed more favourably by the ECB than in its 2020 report and much more favourably than in its earlier reports.

The reports highlight that the Croatian legislation is compatible with the EU Treaties and the Statute of the European System of Central Banks and of the European Central Bank.

Croatia was assessed more closely than the other countries under review, given the fact that the Croatian authorities have announced their intention to adopt the euro as of 1 January 2023.

HNB enters Eurosystem, monetary authority of euro area

Croatia's entry into the euro area also means that the Croatian National Bank (HNB) enters the Eurosystem, which comprises the European Central Bank (ECB) and the national central banks of the Member States whose currency is the euro.

The Eurosystem is the monetary authority of the euro area with its primary objective being the maintenance of price stability for the common good. Acting also as a leading financial authority, the Eurosystem aims to safeguard financial stability and promote European financial integration. 

The ECB has the central role in the Eurosystem, and the main body of the ECB is its six-member Executive Board which consists of the President, the Vice-President and four other members. All members are appointed by the European Council, acting by a qualified majority.

The ECB Governing Council is the main decision-making body of the ECB. It consists of the six members of the Executive Board, plus the governors of the national central banks of the euro area countries.

Dual price display

In September, the four months prior to the switching to the euro, the obligation of dual price display both in national currency (kuna) and the euro goes into effect in Croatia.

The two-week period of dual circulation of both currencies will run as of 1 January.

Coins produced in Croatia

Euro banknotes are taken from the ECB, while euro coins will be produced in Croatia. Euro banknotes are identical in all the euro zone's members, while the euro coins have national sides with national symbols.

There are eight euro coin denominations, ranging from one cent to two euros.

Concerning Croatia's symbols, all coins will have the Croatian chequerboard in the

The coin of 2 euro also includes Croatia's map, the coin of 1 euro has the motif of marten, 10c, 20c and 50c coins have the motif of researcher Nikola Tesla, while 1c, 2c, and 5c coins have the HR letters written in the Glagolitic script.

Coins with the Croatian national side can start to be minted once the Council of the EU adopts a decision on the introduction of the euro in the Republic of Croatia.

(Hina) ms

Tuesday, 5 July 2022

European Parliament Supports Croatia's Accession to Eurozone

ZAGREB, 5 July 2022 - The European Parliament supported Croatia's accession to the euro area by a vast majority of votes on Tuesday.

With 539 votes in favour from 632 MEPs in attendance, the European Parliament adopted the report on the introduction of the euro as legal tender in Croatia as of 1 January 2023, saying that Croatia met all the criteria for accession to the euro area.

Forty-eight MEPs abstained form the vote and 45 voted against, mostly those from right-wing political groups who criticised Croatia's euro-area membership bid during discussion at a plenary session of Parliament on Monday.

Before an EU member state joins the euro area, the European Parliament gives its opinion on the recommendation from the European Commission. The last step is the adoption of the proposal at a meeting of the Economic and Financial Affairs Council on 12 July. The European Council has already endorsed Croatia's euro area entry.

By adopting the euro, Croatia will join the Eurosystem, which comprises the European Central Bank and the central banks of the euro-area member states. The Croatian National Bank governor will sit on the Governing Council of the European Central Bank.

The Croatian finance minister will participate in Eurogroup meetings and the prime minister will attend euro-area summits. Croatia will also automatically become a member of the banking union, a bank supervision and resolution system.

The report by European Parliament rapporteur Siegfried Muresan of the European People's Party (EPP), which was adopted on Tuesday, says that "Croatia fulfils all the criteria for adopting the euro as a result of ambitious, determined, credible and sustainable efforts by the Croatian government and the Croatian people."

The report notes that Croatia’s accession to the euro area is the first significant EU integration process after Brexit and that it should enhance the positive image of the European Union in the Western Balkans region.

"Notwithstanding the difficult socio-economic situation generated by the health crisis and the most recent increase in energy prices, Croatia's adoption of the euro and the fulfilment of the necessary criteria represent a strong political signal of the viability and attractiveness of the single currency of the Union," the report says.

Adoption of the euro will strengthen Croatia's economy and benefit its people and companies, as it will make the country's economy more resilient, attract more foreign investment, increase the confidence of international investors and cut down currency exchanges, that will have a relevant effect in the country's vital tourism sector, the European Parliament predicts.

The Croatian government was called upon to ensure that the introduction of the euro does not lead to artificial price increases.

"Croatia joining the euro area represents a strong political signal of the viability and attractiveness of the single currency of the Union. Twenty years after the introduction of the first banknotes, the euro is a symbol of European strength and unity. Thanks to its great commitment in its efforts to meet the conditions for adopting the euro, Croatia is now ready to join the euro area on 1st January 2023, less than a decade after joining the EU. The euro area as a whole will then welcome its twentieth member," the European Parliament said in an explanation of its favourable assessment of Croatia's readiness to adopt the euro.

For more, check out our politics section.

Friday, 24 June 2022

Belonging to Euro Area Boosts Croatia's Resilience to Crises, says PM

ZAGREB, 24 June 2022 - Support for Croatia's eurozone membership bid is an excellent sign for its highly euroized economy and will also boost its resilience to crises, Prime Minister Andrej Plenković said on Friday ahead of the start of the second day of the EU summit meeting.

One of the topics on the agenda of the two-day summit meeting is Croatia's entry into the euro area, and the leaders of the EU members states will support Croatia's accession, which is the penultimate step in the decision-making on receiving an aspirant in the euro area.

The last step is the adoption of three legislative proposals concerning Croatia's introduction of the euro, which will be made by the Council for Economy and Finance (EU Ecofin Council) on 12 July.

Thus, Croatia's changeover to the euro can start on 1 January 2023.

Today's summit meeting is very important for Croatia, which will become the 20th member of the euro area. This is a strategic goal of my cabinet, said Plenković while arriving at the summit meeting.

7 in 10 tourists in Croatia come from the euro area

Commenting on the highly euroized economy in Croatia, Plenković noted that 50-60% of loans and savings are tied to the euro, and 70% of travellers visiting Croatia are from the euro area, while two-thirds of the exchange is with the euro area.

The membership of the euro area will make Croatia better prepared to respond to crises such as energy and food crises or inflationary pressure, he said adding that the membership of the EU facilitated Croatia's efforts to address the COVID-19 pandemic.

For more, check out our politics section.

Monday, 6 June 2022

FinMin: Everything Should Be Done So Euro Doesn't Trigger Price Hike

ZAGREB, 6 June 2022 - Finance Minister Zdravko Marić said on Monday that everything will be done so that the introduction of the euro as legal tender does not trigger a price hike.

"We will do absolutely everything, regardless of inflationary pressure and our efforts to relieve it, to prevent euro introduction from becoming an additional trigger (of price hikes) for individual market stakeholders," Marić said, adding that this was why the dual display of prices would start on 5 September.

Addressing the conference "Croatia in a New Economic Environment", organized by the 24sata daily, Marić recalled that the law on the introduction of the euro foresees 12 institutions that are responsible for the implementation of the law, including the Croatian Financial Services Supervisory Agency (HANFA), State Inspectorate, Croatian National Bank and the Finance Ministry.

These institutions will monitor the situation closely, and civil society organizations will join in the process as well so that any unfair conduct is reduced to a minimum, said Marić.

Marić recalled the recent European Commission Convergence Report, which said that Croatia was the only candidate country that had fulfilled all the accession criteria and was prepared to introduce the euro on 1 January 2023.

If Croatia joins the euro area on that date it will have spent the least time in the European Exchange Rate Mechanism (ERM II) of all member states, added Marić.

He said the final decision on Croatia's accession to the euro area will be adopted by the Council of Finance Ministers in Brussels on 12 July.

"If everything goes as we expect... and Croatia's entry to the euro area is formally announced for 1 January next year, the rate of conversion will be defined," he said but could not say whether the exchange rate would be the same as when Croatia entered the ERM II.

He underscored, however, that in the majority of cases it stayed the same, and if there were to be any change that will not be significant.

In July 2020, when Croatia joined the ERMII, the exchange rate was €1 = 7.53450.

Marić added that joining the Schengen area of passport-free movement was also very important for Croatia.

Croatia meets all the criteria to join the Schengen area, however, its admission depends on a number of other factors, including the political will of the member states, he said.

"Croatia has proven that it knows how to protect EU borders," he said, expressing the belief that the country would achieve the goal of Schengen area membership as well.

For more, check out our politics section.

Saturday, 4 June 2022

Employers to Be No Longer Required to Garnish Wages Upon Euro Adoption

ZAGREB, 4 June 2022 - The planned changeover to the euro in 2023 obliges Croatia to amend a set of laws, including the legislation regulating the enforced collection of delinquent debts, the Jutarnji List (JL) daily reported on Saturday.

Apart from changing all the laws that cite the kuna, some other laws will have to be amended, the daily newspaper says, adding that the change would further reinforce the protection of consumers against invalid contracts.

Currently, apart from the Financial Agency (FINA), the Croatian Pension Insurance Fund (HZMO) and employers are also authorized to garnish pensions and wages respectively to withhold the earnings of an individual for the payment of his or her debt in accordance with out-of-court settlements.

The employers complain about this obligation as an additional administrative burden.

Furthermore, employers are often at a loss on how to deduct money from an employee's monetary compensation so as to withhold a part of the salary subject to the enforced collection.

Therefore, the justice ministry plans to introduce a single system for the enforced collection when it comes to the wage and pension garnishment, and that only FINA should be authorized to collect delinquent debts from the income of debtors.

For more, check out our business section.

Monday, 23 May 2022

Croatia Could Get Positive Assessment on Euro Introduction on 1 June

ZAGREB, 23 May 2022 - The European Commission plans to issue a convergence report on 1 June which could give Croatia a final assessment on its readiness to adopt the euro.

European Commission Executive Vice-President Valdis Dombrovskis on Monday confirmed that the Commission plans to release its convergence report on 1 June.

"In Croatia debt ratios have declined significantly over the years and show a strong downward trend. This sends an important signal ahead of the convergence report that we will present on 1 June. As you know, Croatia aims to adopt the euro as its currency on January 1, 2023," Dombovskis told a press conference.

In its analysis of the macroeconomic situation in Croatia, the Commission notes that the country has made progress in reducing private debt and net external liabilities. It underscores that public debt remains high but continues its downward trend towards the situation prior to the COVID-19 pandemic. The banking system remains stable and liquid and the share of bad loans is decreasing. The potential for production growth has increased and funds under the Recovery and Resilience Mechanism can help deal with other vulnerabilities, the Commission says.

The Commission publishes its convergence report every two years. According to the last report in June 2020, Croatia had fulfilled all the criteria to enter the euro area except for membership of the European Exchange Rate Mechanism (ERM II).

Croatia soon met that criterion too, when it entered the ERM II on 10 July 2020.

The readiness to introduce the euro is determined according to convergence criteria, including price stability, regulated public finances, exchange rate stability, and convergence of long-term interest rates. National legislation is checked against the rules of the Economic Monetary Union (EMU).

Currently, the inflation rate is the only uncertain criterion at the moment. It must not exceed by more than 1.5 percentage points the average inflation rate of the three EU countries with the lowest annual inflation in the year preceding the assessment of the situation in the candidate country.

If Croatia gets a positive assessment, the finance ministers of the 19 euro area countries need to adopt the Commission's recommendation with a qualified majority.

The formal decision is delivered by Ecofin, comprising all EU finance ministers, after consultations with the European Parliament and following the June summit of EU leaders.

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.

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