Tuesday, 25 January 2022

How Will Croatian Eurozone Accession Affect Kuna-Winning Game Shows?

January the 25th, 2022 - How will Croatian Eurozone accession, which is rapidly approaching and currently due to happen at the very beginning of next year, affect game shows in which prizes are paid out to winners in Croatian kuna?

As Poslovni Dnevnik writes, Croatian Eurozone accession will occur on January the 1st, 2023, and then the euro will replace the kuna as the official currency in this country as well. At that moment, a lot will change, but what interests quiz and game show fans is whether or not the prize money in the popular show "Who wants to be a millionaire?" will increase from one million kuna to one million euros.

Vecernji list finds out that things in that regard are still very much up in the air.

''We haven't totally ruled out the possibility of competitors fighting for a prize of one million euros, but it's more likely that this won't be the case. It will be difficult to plan seven and a half times more funds for the prize fund in the production plan than is the case now. That's a real issue, but it hasn't really been discussed yet.

The originally British "Who wants to be a millionaire?" is also aired on many commercial TV stations in other countries as well, and in those countries, the fund is covered by sponsors. Maybe part of that fund could be covered by sponsors in this country as well.

''There are different options and they are all still being discussed, and when the time comes, we'll have to decide on what our format will look like,'' said Igor Grkovic, the editor of ''Who wants to be a millionaire?" and ''The Chase''.

''We won't have any problems with "The Chase", as the amount of cash offered for the answering of the questions will simply be converted from 3,500 kuna to 500 euros. As for "Who wants to be a millionaire?", we've seen many different examples on how that's done from other countries. Slovenians play for 100,000 euros, and countries such as Slovakia, Estonia, Latvia and Lithuania cancelled their versions of the show before joining the Eurozone. I guess they didn't want it to still be being called "Who wants to be a millionaire?" when the prize isn't a million euros,'' Grkovic said.

It is interesting to compare experiences in other countries. As previously touched on, "Who wants to be a millionaire?" started in the UK back in 1998 and has been broadcast in more than a hundred countries since. Regardless of the name, in some countries, much less than a million is won. For example, in the Albanian and Kosovar versions of the show, the highest prize was 50,000 euros. A new season of the show is being broadcast in Bulgaria, where the main prize is 100 thousand levs, or 385 thousand kuna, and in Greece, as well as in neighbouring Slovenia, the top prize is 100 thousand euros.

For more on Croatian Eurozone accession, check out our lifestyle section.

Saturday, 22 January 2022

Boris Vujcic Reveals All Locations for Kuna-Euro Cash Exhange

January the 22nd, 2022 - Boris Vujcic has revealed all of the locations at which the Croatian kuna can be exchanged for the euro as the country edges closer to Eurozone entry.

As Poslovni Dnevnik writes, Prime Minister Andrej Plenkovic and CNB Governor Boris Vujcic addressed the public at a recent session of the Council for the Introduction of the Euro as the Official Currency, held at the National and University Library.

Plenkovic: There are many advantages for citizens

"Why is the introduction of the euro good? There are benefits for our citizens. Currency risks will disappear. The euro will bring with it a great impetus to the international exchange of goods and services,'' explained Plenkovic.

“Euro deposits account for more than 76 percent of total time and savings deposits with banks, and 50.3 percent of total bank placements are euro placements. We intend to highlight several fundamental principles of this process which are included in the bill. The first and most important thing is consumer protection, we must prevent any situations that would take advantage of the introduction of the euro to the detriment of consumers,'' added the Prime Minister.

"The intention is that in the beginning the prices will be expressed twice, both in kuna and in euros. Throughout the whole of 2023, after the introduction of the euro, prices will also remain highlighted in kuna. So, first we'll pay in kuna and see the prices in euros, and then we'll pay in euros, but we will also have the prices visible in kuna,'' he said.

After Plenkovic, CNB Governor Boris Vujcic spoke, HRT writes:

"The most important thing in the law is that it contains the principle according to which the existing contracts stating the reference to the kuna are still valid. We're removing any possibility of legal uncertainty during Croatia's changeover to the euro,'' he said.

"When it comes to the process of exchanging the kuna for the euro, consumer protection is important. Converting kuna into euros will be done by and in banks automatically and without any incurred costs,'' assured Boris Vujcic.

"As for deposits and loans, people don't need to worry, the conversion into euros will be done automatically on the day of the introduction of the euro in Croatia at a fixed conversion rate and without any cost. Agreements on all loans and deposits will continue to be valid,'' he added.

"As for interest rates, the rule is that fixed interest rates will remain fixed, and when it comes variable interest rates, if the variable parameter needs to be adjusted when introducing the euro due to rounding, this law stipulates how this adjustment will be made," Boris Vujcic said.

"The consumer must not be put in a worse position than they were in before"

"Again, the important principle is that the consumer cannot be in a worse position than they were in before. If there are any differences in the second decimal, it will be at the expense of the bank, not at the expense of people. When exchanging kuna cash, about 36 billion kuna is in circulation at the moment, it would be good to deposit as much of that money in banks as possible this year in order to logistically facilitate the conversion itself,'' noted the governor.

"Those who fail to do so will have a chance after that, for one year at Fina, in banks and at Croatian Post (Hrvatska posta) offices, and banknotes will be able to be exchanged forever at the CNB, and the same will be made possible for kuna coins for the next three years," concluded Boris Vujcic.

For more, check out our dedicated lifestyle and politics sections.

Tuesday, 18 January 2022

Plenkovic Talks Croatian Eurozone Entry: Cash At Home? Bank It!

January the 18th, 2022 - Plenkovic has discussed the impending Croatian Eurozone entry and told people who have kuna in cash at home or wherever else to bank it to make their lives easier when the transition happens.

As Poslovni Dnevnik writes, Plenkovic also reminded people of Croatia's entry into the EU back in July 2013 and the referendum by which the Croatian people confirmed their desire to enter the bloc.

"The Schengen zone and the Eurozone are the only two deeper integrations that Croatia needs to join at this point. The year 2022 is the year of decisions on both," said the Prime Minister.

"Back in 2017, we launched a public debate on the introduction of the euro in Croatia, and a few months later the government adopted this strategy. Why is Croatian Eurozone entry happening? Because we're already a very highly euroized economy,'' he said, noting that 70 percent of tourism revenues come from tourists from EU member states which typically have the euro as their main currencies. He also mentioned that most savings and loans in Croatia are tied to the euro, as N1 also reported.

"Both savings and loans and trade and tourism revenues are linked to the Eurozone," Plenković said. He also spoke about the law on the introduction of the euro as the official currency in Croatia. "The goal is for the adjustment to go smoothly and to enable the economy to function, for people to be informed of things in good time and for Croatian Eurozone entry to be done in a fair and proper way."

In just one year, the only means of payment in Croatia will be the euro, and the kuna will enter the history books.

"This time in one year, the only means of payment in Croatia will be the euro. It's very important to understand the speed of completion of this process, with the introduction of the euro, everything in kuna in the banks will automatically be converted into euros,'' Plenkovic said.

He also spoke about highlighting prices in both euros and kuna.

"Prices will be highlighted in kuna and euros for another year, and for the whole of 2023," he added, noting that the double price highlighting will start in September this year and will continue throughout next year.

"Everyone will be able to exchange kuna for euros in banks, at Fina and at the post office. The transition process will take another year after Croatian Eurozone entry. An additional element is that after that deadline, people will be able to bring their kuna into the CNB and exchange that money for euro banknotes,'' noted Plenkovic.

"I'd like to invite people who have kuna cash at home to come and deposit it at the bank, because the money in kuna will automatically be converted into euros," he concluded.

For more, check out our politics section.

Monday, 17 January 2022

FinMin: All Efforts Should Be Taken to Prevent Unfair and Excessive Prices

ZAGREB, 17 Jan 2022 - Finance Minister Zdravko Marić on Monday called on all stakeholders in the society, including media and major actors in the euro changeover in Croatia, to do their utmost to prevent anyone from using this process to "fish in troubled waters" and charge unfair and excessive prices.

Addressing a news conference at which he, together with Prime Minister Andrej Plenković and Croatian National Bank (HNB) governor Boris Vujčić, outlined a draft act on the introduction of the euro as legal tender in Croatia, Marić underscored the obligation to display prices both in kuna and euro from 5 September through the whole of 2023.

The draft act also envisages some exemptions from this obligation when there are physical limits for such displays or excessive costs. Thus, stands in farmers' markets, newsstands, electronic displays at filling stations, or taximeters will be exempted from this obligation. Also, commodities with prices already printed on them will be sold until stocks last.

However, they are not exempted from issuing invoices and bills both in the kuna and the euro, Marić said.

The authorities today published guidelines for the adjustment of the enterprise sector during the process of switching to the euro.

The guidelines have been prepared by the coordinating committee for the adjustment of the economy and consumer protection, with the economy ministry at its helm.

Undue price rises forbidden

The document highlights the major principle that undue price rises in the euro changeover are forbidden.

Marić admitted that the whole matter had not been regulated by law and called on all actors to join in the fight against any undue price rises.

Fulfilling Maastricht criteria

The minister recalled that Croatia could enter the euro area on 1 January 2023, provided that it fulfilled the convergence criteria, and a final decision on the assessment of Croatia's performance is expected in July 2022.

One of the Maastricht criteria refers to sound and sustainable public finances, which includes trends in the public debt and deficit. Marić said that this was under control and that their reduction was being conducted at an adequate rate.

Also, concerning price stability as a criterion, the inflation rate cannot be more than 1.5 percentage points above the rate of the three best-performing member states.

Marić said that inflation trends should not undermine the entire process.

HNB Governor Vujčić also believes that the convergence criterion about price stability would be met.

The reference value for the inflation rate has never been under the average rate of inflation in the eurozone, Vujčić explained.

Prices of consumer goods and services in Croatia, as measured by the consumer price index, increased by 5.5% in December 2021 compared with December 2020, while in the whole of 2021 they rose by 2.6% year on year, the State Bureau of Statistics (DZS) said today.

Regardless of the acceleration of inflation in recent months, Marić said that Croatia's inflation rate was still rough around the average of the euro area or slightly below this average.

Last Thursday, Marić said that the government had revised its inflation growth projection for this year up to 3.5%, adding that VAT cuts were being considered as part of a set of measures aimed at buffering energy price hikes. Speaking to the press, Marić said then that the government was following developments with price hikes.

He said inflation accelerated in recent months and that its growth in December might exceed 5%, which would be visible at the start of this year.

That prompted the government to revise its projection to 3.5%, up from the 2.5% increase forecast earlier, he added.

The minister said that according to available data and expectations, higher inflation rates were expected in the first months of this year, "after which there should be a convergence to an average 3.5%."

Besides food, the main focus is on energy prices given the price trends of raw materials at the European level, he said, adding that the price of gas for households would be corrected as of 1 April.

He said the government would come up with a package or individual measures aimed at buffering the increase so that living standards were not affected in a major way.

For more, check out our dedicated politics section.

Monday, 17 January 2022

Croatia to Display Prices Both in Kuna and Euro as of September 5

ZAGREB, 17 Jan 2022 - Prime Minister Andrej Plenković on Monday announced a dual display of prices in Croatia, both in kuna and in euro, from 5 September through the whole of 2023.

Plenković made the announcement at a press conference where he unveiled the bill proposing the adoption of the euro as legal tender in Croatia. He was accompanied by Finance Minister Zdravko Marić, Economy and Sustainable Development Minister Tomislav Ćorić, and Croatian National Bank (HNB) Governor Boris Vujčić.

The bill was put to public consultation today and the final proposal is expected to be sent to Parliament for a second reading in the second half of April.

The bill regulates the legal framework, the cash exchange, supplying all legal entities with euro, the loan and deposit conversion, and consumer protection from undue price increases.

Prices will be displayed in both kuna and euro as of 5 September to raise awareness of the euro even before its adoption, for which the target date has been set at 1 January 2023. The dual display of prices will continue throughout 2023.

Plenković said that citizens will be able to exchange kuna for euro at no cost to them at banks, the Croatian Post, and the Financial Agency (Fina) throughout next year, after which they will be able to do so at the Croatian National Bank free of charge too. He called on citizens to deposit any cash they have in banks so that the conversion can be done automatically.

The PM said that the aim is to ensure a smooth switch to the euro and the effective functioning of the economy.

He noted that this year the government would send to Parliament more than 70 proposals concerning the adoption of the euro, including the physical replacement of the national currency with the euro.

Plenković said that Croatia aspired to integrate with the European Union more deeply by joining the Schengen passport-free travel area and the euro area, and in that regard, relevant decisions would be made in the coming months.

He spoke of the steps that had been taken so far regarding the euro adoption and the reasons why Croatia wanted to join the euro area. He said that the Croatian economy is highly euroized, that 70 percent of tourism revenues come from citizens of euro-area countries, 60 percent of trade is generated with those countries, 70 percent of time savings deposits and nearly 60 percent of household and corporate loans are in euro or indexed to the euro.

Plenković said that the goal of euro area membership was included in government activities 20 years ago.

"What will be happening this year will be the culmination of the processes that have been systematically worked on in the last two decades," the prime minister said, announcing that the Council for Euro Adoption would meet before a cabinet meeting on Thursday.

For more, check out our dedicated politics section.

Monday, 3 January 2022

Euro Membership to Better Protect Croatia in Times of Crisis, Says HNB Governor

ZAGREB, 3 Jan 2022 - The membership of the euro area will provide Croatia with better protection in periods of economic crisis, the National Bank (HNB) Governor, Boris Vujčić, told the national broadcaster's (HRT) evening news program on Sunday.

The euro changeover is expected in one year's time, and Governor Vujčić said that a lot of logistical preparations lay ahead.

"We hope that we will enter the euro area in a year's time, and 2022 is the year of preparations," said Vujčić.

The final decision on the date will be known this summer, however, we are making preparations to be ready for the euro changeover on 1 January 2023, he said adding that the central bank, commercial lenders, and the enterprise sector are now due to make preparations for the introduction of the euro.

Dual display of prices

As of this summer, all should be ready to express prices both in the national currency and the euro, said the governor.

He also noted that the country should be ready to provide the market with the euro banknotes and coins upon the transition to that currency.

Asked about the pros and cons of the admission to the euro area, Vujčić said that Croatia would be provided with better protection in the cases of crisis.

The euro adoption will remove the currency exchange risks, and in this segment, Croatia will have the biggest advantages, since its economy is more euroized than any other euro area candidate so far, he explained.

A majority of time savings deposits are tied to the euro, he said adding that for instance, 10% depreciation of the kuna in terms of its exchange rate versus the euro would increase the debt of all the sectors by HRK 50 billion. This is a huge risk that can cause a recession, and our entry into the euro area will remove that risk, he said.

He added that there are currently 36 billion kunas in cash in circulation, and in the next 12 months the money should be either deposited with banks or spent.

The Croatian kuna joined ERM (Exchange Rate Mechanism) II on 10 July 2020 and observes a central rate of 7.53450 to the euro with a standard fluctuation band of ±15%.

Any aspirant for the euro area membership must participate in the mechanism without severe tensions and without devaluing its central rate against the euro for at least two years before it can qualify to adopt the euro. Being part of the Exchange Rate Mechanism is intended to help non-euro-area countries prepare themselves for becoming part of the euro area. It is an important milestone towards adopting the euro.

For more, check out our politics section.

Saturday, 1 January 2022

With Croatian Eurozone Entry Approaching, How Will We Exchange Kuna?

January the 1st, 2022 - Croatian Eurozone entry is rapidly approaching, and if all goes to plan, the kuna will enter into the history books early next year. How will we go about exchanging Croatian kuna for the euro, however? There are slightly different rules for coins and for banknotes.

As Poslovni Dnevnik/Ana Blaskovic writes, if anything in the economic field will mark 2022, it will be all of the hurried final preparations for the introduction of the euro and Croatian Eurozone entry in 2023. The green light for a step towards stronger integration into the European Union (EU) should, apparently, be given in the summer of this year when the exact date of the final transition will be revealed.

Replacing the national currency with the European single one is a massive logistical undertaking for which preparations are underway with the assumption that we will be paying for items in euros from the first day of 2023. Credit and other financial institutions have been in talks with regulators for some time about how to change their IT systems and adjust all of their business processes, a cost that, in the case of banks alone, is estimated to stand between 80m and 100m kuna.

According to the experience of other countries that joined the euro in the past, the central bank expects that when exchanging the kuna for the euro, about 36 percent of the amount of coins in circulation will be returned, ie 1.1 billion pieces of kuna coins and 99 percent of the amount of banknotes, ie more than 500 million pieces of kuna banknotes. Banknotes will be able to be exchanged for euros on a permanent basis, but the deadline for coins will be limited to three years from the introduction of the euro as Croatia's official currency.

The experiences of other European Union countries which are in the Eurozone are diverse. Twenty years after the euro emerged as the single currency, it is estimated that there are still around 8.5 billion euros left in the former national currencies, either under people's mattresses, in old jackets or as souvenirs from the past. The largest amount falls on the unreplaced German marks in which the (recalculated) amount stands at a whopping 6.3 billion euros.

It is followed by the Austrian schilling, which accounts for another 505 million euros, and the Belgian franc, accounting for 428 million euros. In neighbouring Slovenia, for example, the former Slovenian tolars account for 80 million euros, according to Bloomberg.

Part of the reason for nostalgia or forgetfulness probably lies in the fact that some countries have left an unlimited deadline to exchange their currencies, like Germany, at least when it comes to banknotes. Spain, France and Austria, on the other hand, have long since closed the door to such a possibility, leaving any pesetas or francs to become collector's items for those nostalgic about pre-euro Europe.

Croatia already has experience in exchanging currencies. When the kuna was introduced after the stabilisation programme on May the 30th, 1994, it replaced the Croatian dinar as a temporary currency issued by the Ministry of Finance with the signature of the Minister. The CNB exchanged dinars on a regular basis until the end of 1994 and subsequently until the end of June 1995. With this being a memory, it's hoped that Croatian Eurozone entry will also be that bit smoother for a country that has been very much in transition in many respects since the end of the Homeland War.

"Since the replacement of Croatian dinars hasn't been possible since mid-1995, Croatian dinar banknotes have exclusively numismatic value," the central bank said. According to their data, 37 percent of the total printed 513.6 million dinar banknotes remained unchanged, so it will be interesting to see how much kuna will remain nostalgically in pockets, down the sides of sofas, under beds and in varying collections of old and foreign money that many people keep.

"Given the fact that after three years, kuna coins will no longer be able to be exchanged for euros and will no longer play a role as a means of payment, they will be able to be adequately disposed of without any risk of reappearing on the exchange. Therefore, cooperation has been initiated with the Ministry of Defense in finding adequate, supervised and protected space that the Croatian National Bank will lease for the storage of withdrawn kuna coins,'' the CNB said, adding that they expect a lease agreement with the Defense Ministry in regard to that.

In parallel with their withdrawal from circulation, kuna banknotes will be successively destroyed with banknote processing systems that have the ability to totally destroy them. Four months before the introduction of the euro, banks will be supplied with banknotes, and a month later with euro coins. When the countdown begins in the last 30 days, the euro will be ready in the offices of Fina and Croatian Post (Hrvatska posta), and the indirect pre-supply of companies and shops will begin.

On the very day of the introduction of the euro, ie Croatian Eurozone entry, the "big bang" approach will be applied to savings and loans. This means that all kuna savings and deposits on current, savings and other accounts, as well as all loans will become euro loans at a fixed exchange rate free of charge. The key assumption is that any change in interest rates (in the case of variable interest rates) must not be to the detriment of the client, while fixed interest rates will remain the same.

The first two weeks after Croatian Eurozone entry will be a period of double circulation in which cash can be exchanged free of charge at banks, Fina and post offices, and then only at banks for which they will be entitled to charge a fee. A year later, the Croatian kuna will be able to be exchanged for euros only at the Croatian National Bank, free of charge.

Since one of the biggest fears that accompanies the whole saga surrounding the euro is the fear of rising prices, which is no longer insignificant in the face of accelerating inflation, it will be crucial to dual disclose the prices that will last at least one year starting in August. An information campaign will follow in which people will be encouraged to deposit as many kuna coins and banknotes as possible to banks in order to easily convert them to euros at a fixed exchange rate and free of charge on the day of the introduction of the euro.

For more on Croatian Eurozone entry, follow our politics section.

Thursday, 30 December 2021

German Financial Expert Claims Croatia Isn't Ready for Eurozone Entry

December the 30th, 2021 - One German financial expert has claimed that Eurozone entry for Croatia, which is due to take place quite soon, is still premature. Is the country ready for the changes? Apparently not, according to Otmar Issing.

As Poslovni Dnevnik writes, in addition to joining the Schengen area, Croatia's Eurozone entry has been cited as one of the main goals of Croatian foreign policy for years now. This goal should be achieved at the beginning of 2023, for which Croatia has the support of Brussels.

That said, there are some economists such as former European Central Bank (ECB) Executive Board member Otmar Issing of Germany who believe that Eurozone entry for Croatia would be premature, Deutsche Welle reports.

As he said in an interview with the Frankfurter Allgemeine Zeitungu (FAZ), currently no country is ready to join the Eurozone. "At the moment, I can't see any country that is ready enough to join the Eurozone," Issing told FAZ on the occasion of the recent twentieth anniversary of the introduction of the euro into circulation back on January the 1st, 2002, which those of us who grew up in Europe remember so well.

"It can't be said that every new member of the Eurozone necessarily contributes to the weakening of the euro, but these countries must guarantee some lasting stability. It isn't enough to get ready for the wedding and then return back to your old habits once you're married,'' said Issing, who also played the role of ECB chief economist from 1998 to 2006 and was credited with strategically planning the introduction of the euro as the bloc's single currency.

The last EU member state to enter the Eurozone in 2015 was Lithuania, and currently Bulgaria is also aiming to join. In fact, according to the membership agreement, all members of the European Union are obliged to accept a common currency when they meet the criteria, the only exceptions to this was the United Kingdom, which kept pound sterling, and Denmark.

Issing believes that the heterogeneity of Eurozone member states and thus different focuses when it comes to interests is already a big problem for the ECB. He believes that the governors of the national central banks should follow a common course and not simply blindly follow national financial policy. Issing also defended the euro against accusations that its introduction has made everything more expensive.

"It can look like that when it comes to purchasing daily necessities, so that's the impression people have. But when we look at spending which occurs in regard to most of the household budget, such as rent or heating costs, those costs have remained stable even after the introduction of the euro,'' Issing told FAZ.

Issing, who previously held the same position at the German central bank before taking office at the ECB, said the decision to print non-national symbols on euro banknotes at the time was a decision that proved correct in the end.

“Imagine if the French wanted to put Napoleon on their banknotes. How would the countries who were occupied by Napoleon react to this? That's why we decided on the symbolic motif of the bridges,'' Issing concluded.

For more, check out our politics section.

Tuesday, 14 December 2021

Plenković: 2022 Essential Because of Accession to Schengen and Euro Area

ZAGREB, 14 Dec 2021 - Next year is very important because we expect a final decision on Croatia's accession to the Schengen and euro areas, Prime Minister Andrej Plenković said on Tuesday, recalling that Croatia has access to about €25 billion from European sources for this decade.

Addressing a launch conference for the Croatian-language special annual edition of the global magazine The Economist, Plenković said that Croatia has about €25 billion at its disposal for this decade, including regular funds from the seven-year European budget, funds from the NextGenerationEU, and about one billion euro for reconstruction following last year's devastating earthquakes.

"That is more than we have ever had....and these are mostly grants," he underscored.

This year's conference dealt with the transformation of the Croatian economy through the National Recovery and Resilience Plan (NPOO) 2021-2026 as the basis for the absorption of funds from the NextGenerationEU mechanism, under which Croatia has access to €6.3 billion in grants and another €3.6 billion in favorable loans.

The NPOO has been approved by the European Commission and Council, Croatia has already received an advance payment of HRK 6.14 billion, and in the first half of 2022 it will receive a new tranche, Plenković said, adding that there are some EU countries that have not yet even delivered their national plans.

The NPOO is the reform basis and financing basis for economic growth and is forecast to increase Croatia's GDP in 2022 and 2023 by 1.4 percentage points.

Economy proved to be exceptionally tough

Plenković said that the national economy showed exceptional strength, agility, and resilience, particularly since the tourism season was beyond all expectations. He also mentioned growth in personal consumption and economic growth which is expected to exceed nine percent, which is more than the eight percent drop in GDP last year.

The most important thing is that Croatia has maintained its image among international organizations, financial institutions, markets, and credit rating agencies, he noted.

"Anyone who is following us sees our credibility and the direction of our actions," said Plenković and highlighted that the direction is based on a speedy return on the path to decreasing public debt and a balanced budget, which cannot be expected this year or next.

He recalled that the Fitch agency has upgraded Croatia's credit rating to its highest level since rating agencies have appraised Croatia.

"This is the framework with which Croatia is entering 2022, which should be very significant institutionally because we expect a final decision on accession to the Schengen and euro areas," said Plenković.

He emphasized the importance of political stability, noting that the period from 2021 to 2028 will have just one intensive period of about 12 months of electioneering.

Government faced unbelievable challenges last year

Speaking of last year, Plenković said that all governments faced an unbelievable challenge as a consequence of coronavirus and had to find solutions to enable normal functioning and economic trends.

That led to a decline in all trends and weaker economic activities, but the government managed to overcome that and it does not regret the expenditure due to the coronavirus crisis which has exceeded HRK 40 billion.

"We have no regrets because we did not see any mass layoffs or bankruptcies," the PM underscored, recalling government support for wages in the private sector among other measures.

Challenges of climate change and demographic revitalization

Globally, the pandemic is still continuing and no one can know when it will end and what new variants we will meet, or what measures we will have to take. However, we will do everything we can to protect the health of citizens while ensuring economic, financial, and social flows, he said.

Everyone has had to learn how to balance - governments, companies, educational institutions, and international institutions, he said.

In the global context, Plenković reflected on relations between the USA and China, the need to strengthen the EU's strategic autonomy in all possible aspects, relations with Russia in the context of Europe's stability, and the issues of migration, climate change, and demographic revitalization.

Polarisation in society during the coronavirus crisis

Plenković said that the coronavirus crisis has led to an exceptional polarisation in the social and political environment, both in Croatia and in the world.

He highlighted the impact of the Internet, social networks, and false information that deceives people, which is why they do not trust institutions, public health, and science.

The latest edition of The Economist was presented by Ivan Vrdoljak from the Livit company. The edition is published in Croatian and provides analyses and forecasts for next year.

Vrdoljak said that The Economist was wrong in its projection of Croatian growth for this year due to unexpectedly fast recovery.

The Economist has forecast growth of 4.7% whereas the government expects growth of about 9%. The Economist projected next year's Croatian GDP growth at 4.1% and inflation at 1.7%, added  Vrdoljak.

For more, check out our dedicated politics section.

Friday, 10 December 2021

Marić: Croatia's Eurozone Entry to Benefit Economy and Households

ZAGREB, 10 Dec 2021 - There is a strong consensus that accession to the euro area will benefit the Croatian economy and households, Finance Minister Zdravko Marić told reporters in the northern Adriatic resort town of Rovinj on Friday after a conference on this subject organised by the Večernji List newspaper and Istria County. 

That's why Croatia should do all that is necessary to reduce and minimise any negative risks, such as inflation, and take advantage of positive effects, which outnumber negative ones, for the benefit of its economy and citizens, Marić said.

"Over the past few months we have been witnessing price increases, but they have nothing to do with our eurozone entry. That's a global issue caused by disruptions to supply chains and increases in prices of energy and resources," he added.

Noting that inflation was the biggest risk on Croatia's path to eurozone membership, Marić cited statistics showing that inflation had been around 4% in the past several months and around 2.5% for the whole of this year, which puts Croatia "slightly below the EU average."

Croatian National Bank Governor Boris Vujčić said that Croatia was the country that would profit the most from eurozone membership.

"One of the benefits of joining the European monetary union is the reduction of foreign exchange risk, which is biggest in Croatia among all EU countries that have not yet adopted the euro. We have a very high level of euroisation. Most of the debt of all sectors in Croatia, including households, companies and government, is tied to the euro. In kuna, it amounts to over HRK 520 billion, which means that 75% of the debt of all sectors is either in euro or indexed to the euro," Vujčić said.

He added that with entry into the euro area interest rates would start to fall, the sovereign credit rating would increase and Croatia would become more attractive to tourism and investment.

For more on politics, follow TCN's dedicated page.

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