Thursday, 21 July 2022

Government Adopts Decision Announcing Adoption Of Euro As Legal Tender

ZAGREB, 21 July 2022 - The Croatian government on Thursday adopted a decision setting 1 January 2023 as the date for introducing the euro as legal tender in Croatia.

"The euro will become the official monetary unit and legal tender in Croatia on 1 January 2023," the government said in its decision, presented by Finance Minister Marko Primorac.

The exchange rate was fixed at HRK 7.53450 for one euro.

The period of dual circulation of the two currencies begins on 1 January 2023 at 00:00 and ends on 14 January 2023 at 24:00 hours.

The period of mandatory display of dual prices lasts from 5 September 2022 at 00:00 hours to 31 December 2023 at 24:00 hours.

For more, check out our politics section.

Thursday, 2 June 2022

One Of Two Strategic Goals Achieved By Meeting Euro Criteria, PM Says

ZAGREB, 2 June 2022 - Prime Minister Andrej Plenković said on Thursday Croatia was one of the EU member states outside the euro area which had met all the criteria for membership in the European economic and monetary union, whereby one of the government's strategic goals has been achieved.

Speaking after a meeting with the European Commission Executive Vice President for An Economy that Works for People, Valdis Dombrovskis, Plenković said Croatian officials had the opportunity to hear the Commission's assessments on its convergence report on Croatia and the other countries still outside the euro area.

"Such a positive report on Croatia is very good, given that by all criteria, which are equal for all, we are the only country meeting the criteria for membership in the European economic and monetary union," he told the press.

The Commission presented the report yesterday, confirming that Croatia is one of the observed member states meeting all nominal convergence criteria and that its legislation is fully aligned with the Treaty on the Functioning of the European Union as well as the Statute of the European System of Central Banks and the European Central Bank (ECB).

The Commission, therefore, concluded that Croatia is prepared to introduce the euro on 1 January 2023, becoming the 20th euro area member state.

"It's particularly important that Croatia meets the price stability criterion. You have seen that over 12 months up to April this year the average inflation was 4.7%, and the reference value was 4.9%, so we were within that criterion," Plenković said.

It is also very important that Croatia has received confirmation from the ECB that it is below the Maastricht budget deficit criterion of 3% of GDP.

"Croatia no longer has macroeconomic imbalances and in this whole set of our efforts, from responsibly managing public finance, coming out of the excessive deficit procedure, raising the credit rating to investment level, the fact that we carried out all the reforms that were on the table after entering the European Exchange Rate Mechanism and the banking union on time, in line with the action plan, shows that by implementing the euro introduction strategy, Croatia has achieved one of the fundamental political goals during the terms of our two governments," Plenković said.

The other goal is entering the Schengen Area, he added.

For more, check out our politics section.


Friday, 13 May 2022

Croatian Parliament Passes Law On Adoption Of Euro As Legal Tender

ZAGREB, 13 May 2022 - The Croatian parliament on Friday passed a law on the adoption of the euro as legal tender, with 117 MPs voting in favour, 13 against and one abstaining.

MPs rejected amendments by Bridge and the Green-Left Bloc and a conclusion by Bridge that the government had not endorsed.

The euro is expected to be introduced on 1 January 2023.

As of the 5th of September this year through 2023, prices would be displayed both in kuna and in euro.

Next year there will be no cost for exchanging kuna cash for euro, which will be done in banks, post offices and the Financial Agency. Citizens will be able to exchange kuna bills for euro in the central bank indefinitely.

Bridge and Sovereignists against euro

Before today's vote, some of the opposition again spoke against introducing the euro.

Miro Bulj of Bridge said an estimate of the effects of the introduction should have been made, calling on parliament to repeal the law and saying that experts should state their opinion and the people decide in a referendum.

Marijan Pavliček of the Sovereignists said the party was concerned about how citizens would survive the month upon entering the eurozone and how pensioners and workers would live.

He said it was insane to enter the eurozone during the EU's biggest energy crisis, biggest economic uncertainty, and the biggest inflation in 20 years.

2022 budget revision included in agenda, debate next week

Parliament today added 14 items to the agenda, including a draft revision of this year's budget.

"We'll debate it next Wednesday," Speaker Gordan Jandroković said.

For more, check out our politics section.

Thursday, 5 May 2022

Right-Wing Opposition Says Croatia Not Ready For Euro, Finmin Enumerates Benefits

ZAGREB, 5 May 2022 - The right-wing opposition said on Thursday that Croatia was not ready to introduce the euro and that it would lower living standards, while Finance Minister Zdravko Marić talked about the benefits and said much had been done to reduce the negative effects as much as possible.

A number of regulations reduce the negative effects of introducing the euro on citizens and employers, from stimulating healthy competitiveness to including civil society associations, Marić said in a debate on the final proposal to adopt the euro as legal tender in Croatia.

The benefits are significantly bigger than the damage, he said, adding that the main benefits are the elimination of the currency and interest risks, a two-notch higher credit rating, and a lower risk premium.

Marijan Pavliček of the Sovereignists said entering the euro area at a time of the biggest financial uncertainty, energy crisis and high inflation was not wise.

He said this was not an economic project, but the prime minister's political project, that inflation was 7.8% and GDP growth 3%, that consumption dropped, while inflation and the deficit increased.

Božo Petrov of Bridge said all independent financial experts said Croatia was not ready for the euro. He asked how the government would guarantee that prices would not rise even more, that imports would not take over and wages fall.

Marić said it was difficult to accurately predict or guarantee something even in more normal circumstances.

Ružica Vukovac of For a Just Croatia said it was not a good time and that Croatia's economic problems should be solved first.

Ante Prkačin of the Democratic Movement said that by introducing the euro, Croatia would move further away "from the fate of Croats in Bosnia and Herzegovina, who are subject to political terror."

On the other hand, Emil Daus of the Istrian Democratic Party said introducing the euro was a logical part of European integration. The problem is, will we be a strong economy and a functioning state with clear long-term goals, he added.

Boris Lalovac of the Social Democratic Party said the euro would have a positive effect on transaction and currency costs.

Zvane Brumnić of the Social Democrats said "our only chance is if someone else takes care of us."

Grozdana Perić of the ruling HDZ said the euro would make doing business more favourable and safer as well as facilitate investment, economic growth and higher living standards.

Marić reiterated that the Council of the EU's decision on Croatia's accession to the euro area was expected in July and that if all the requirements had been met, the euro would be introduced on 1 January.

He said Croatia met all criteria as last year's deficit was under 3%, the public debt-to-GDP ratio was reduced by seven percentage points and inflation was within the EU average.

Prices will have to be displayed in both kuna and euro as of 5 September.

For more, check out our politics section.

Tuesday, 22 March 2022

People Flock to Croatian Exchange Offices: "They're Buying Euros Like Oil"

March the 22nd, 2022 - Croatian exchange offices have been seeing a bit more traffic than they usually would at this time of year as people claim there is a ''euro shortage'' and that these offices are buying euros ''like oil''.

As Poslovni Dnevnik writes, the ongoing war in Ukraine is affecting everything, and the operation of Croatian exchange offices hasn't been immune. Since the Russian invasion began last month, there have been crowds outside of exchange offices across the country, and Croats are buying euros en masse. These queues and crowds, Croatian exchange office employees say, last for days.

"There's a lot of work to be done, and this currency is being bought just like oil is being bought in stores," saleswoman Sanja Dadasovic told RTL. Traffic has jumped up to 50 percent in recent days, and it isn't just euros that are being bought.

"The other day we had ladies who bought some dinars, Czech crowns and Polish zlotys, which is fine for us, but there is a huge demand for euros. We think that people are taking out their reserves,'' said Ankica Jurinovic-Ostojic, the owner of one Croatian exchange office in Zagreb.

"There's a shortage of euros"

“Mostly, we're talking about 4, 5, 7 or 10 thousand euros, but we have clients who come and buy and coins as well. It used to be that no one wanted to buy coins, but that's happening now as well,'' claimed Jurinovic-Ostojic.

"All the euros we buy now in our branches, we sell immediately at the same time. There's a shortage of euros. People are probably afraid of inflation and then they invest everything they have in gold,'' said Gabor Soregi, president of the Association of Croatian Exchange Offices.

Experts say there is no reason to panic

"Liquidity, capitalisation of the overall Croatian financial system is more than satisfactory, it has been and will continue to be, and as indirect members of the Eurozone, I think there is really no need for such activities," said Hrvoje Japuncic, a Croatian financial analyst.

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