Wednesday, 17 July 2019

Milanović Supports the Introduction of Euro

ZAGREB, July 17, 2019 - The Social Democratic Party (SDP) candidate for president, Zoran Milanović, on Tuesday said that he is not opposed to introducing the euro currency in Croatia, but the condition for that is continual talks which will lead to a decision on the fate of the country.

"Croatia in the euro area in five years' time, why not?" Milanović said in a video posted on his Facebook profile and underscored that that does not mean cheaper money because lower interest rates exist only in functioning countries.

He said that he was not for introducing the euro at a referendum and at meetings with the International Monetary Fund, which he called "the world's financial policeman", but "as a community of people who think and make decisions on their fate in the next ten, twenty, thirty years."

He assessed that introducing the euro means that Croatia will not have a national currency. "That means a currency on whose trends decisions are made by the people we don't elect. And I reiterate, why not? But not in this way," he said.

"Introducing the euro in Croatia does not mean cheaper money! We see that in a series of examples in Europe in which countries which are not in the euro area have the lowest interest rates. Interest rates do not depend on whether you are in the euro area but to what extent you are a functioning state, whether endemic thievery exists or order and the rule of law. That is why I advocate a modern Croatia, talks, not dictate," said Milanović.

More news about the presidential elections can be found in the Politics section.

Monday, 8 July 2019

Unionists Slam Government for Not Publishing Letter for Croatia's Admission to ERM II

ZAGREB, July 8, 2019 - Representatives of the Matica union federation criticised the government on Monday for not making its letter of intent and action plan for Croatia's admission to the European Exchange Rate Mechanism (ERM II) public.

"Unfortunately, the government is treating this issue with undemocratic inconsistency, and to make matters worse, state institutions and some media outlets are taking part in such conduct. Croatia's general public is not faced with the truth, which is extremely concerning and alarming," the leader of the trade union federation, Vilim Ribić, told a news conference in Zagreb.

This past Thursday, Croatia sent a letter to the euro area member states, Denmark and EU institutions, expressing its intent to enter ERM II, taking the first formal step towards participation in ERM II, which precedes the adoption of the euro as legal tender.

The letter expresses Croatia's readiness to implement reforms as part of further preparations for participation in ERM II. By successfully participating in ERM II for at least two years, Croatia should formally meet the exchange rate criterion of nominal convergence. Croatia has been meeting the other criteria for a while, namely price stability, public finance sustainability and interest rate convergence, while the prudent monetary and fiscal policy should ensure that it stays that way.

Ribić today said that neither the letter nor the action plan were presented to the public, and members of the National Euro Adoption Council who had convened last week had not been provided with the papers.

As for the pros and cons of the introduction of the euro, Ribić said that the discussions were reduced to "the trivial matter" of whether prices would go up, which did not have a crucial impact on the nation's destiny.

Ribić said the problem lay with the lack of the euro area's readiness for Croatia. "Croatia may be ready for the euro area, however, the euro area is not ready for Croatia or smaller peripheral countries in the European Union that are marked by a weak economic growth and mass-scale emigration," said the unionist.

He insists that the European Union has not developed institutions or compensation mechanisms necessary for countries that fare worse when the common interest, monetary, fiscal and tax policy is conducted.

"The EU is not yet a finished house. There are no mechanisms to help us to have a normal growth and development in cases when we are outvoted. In times of crisis, Croatia has no other way but to torment its own population, which we have witnessed to in the last 10 years," Ribić claimed.

The Matica introduces itself as the Association of Croatian Trade Unions, consisting of 10 trade unions in the field of health care, preschool, primary and secondary education, science and higher education, the judiciary and banking activities.

More news about the introduction of the euro can be found in the Business section.

Wednesday, 3 July 2019

Croatia Soon to Send Letter of Intent to Join ERM II

ZAGREB, July 3, 2019 - Finance Minister Zdravko Marić said on Wednesday that Croatia would soon send in a letter of intent to join the Exchange Rate Mechanism (ERM II), a sort of waiting room for eurozone entry.

"In the letter we will specify things that we plan to fulfil in the next 12 to 18 months and then we will see what comes next," Marić told reporters ahead of a meeting of the National Council for the adoption of the euro as legal tender in Croatia.

"The better we do our homework, the better the effects for all Croatian citizens," he added.

Maric recalled that the government had recently sent a letter to the European Central Bank seeking close cooperation, and that the next move was a letter of intent to join ERM II.

Asked if there would be enough money in the budget for the purchase of new aircraft for the Croatian Air Force, he said: "This matter is not disputed, but everything has to be in accordance with the country's priorities and financial means."

Commenting on demands by restaurant owners for a lower VAT and higher wages, Marić said that the tax system would be thoroughly analysed and any tax changes would come into force on January 1.

He did not specify whether the account of the troubled 3. Maj shipyard would be unblocked, saying only that it was one of the issues that would be discussed further.

More news about the introduction of euro can be found in the Business section.

Wednesday, 26 June 2019

Croatia to Send Letter of Intent for Eurozone Entry Next Week

ZAGREB, June 26, 2019 - Next week Croatia will send a letter to Brussels expressing its intent to join the eurozone, Prime Minister Andrej Plenković announced in an interview with Croatian Radio on Wednesday morning.

Plenković had held several meetings on the margins of a recent EU summit as part of the preparation of the Croatian strategy for the adoption of the European single currency, the euro. He met with European Central Bank President Mario Draghi, European Commission Vice-President for the Euro Valdis Dombrovskis, Eurogroup President Mario Centeno and President of the Eurogroup Working Group Hans Vijlbrief.

"All four men are key for the acceptance of our letter. We are taking the first step to become what is called European Exchange Rate Mechanism II. I think we did very good consultations with both the Central Bank and the Commission, specifying several reform areas on which we will be working over the next year," Plenković said.

He said that the letter of intent would be sent in the middle of next week.

Asked if there was room for further tax cuts, Plenković said that all macroeconomic trends were excellent. "We are dealing with the remaining skeletons from the closet of the Croatian economic transition," he said, citing problems concerning the Agrokor food conglomerate, the Petrokemija fertiliser manufacturing company and the shipbuilding industry.

The PM recalled that in the last three rounds of tax cuts the tax burden had been reduced by 6.5 billion kuna plus 2 billion kuna in administrative cuts, noting that this reflected on investment and wages. He said that in last December alone 450,000 people had received higher wages, or 1.5 billion kuna in total.

"We will continue down this path. There is a task force, the Finance Ministry is in charge. They are doing analyses and wherever there may be room we will pursue further cuts because we think that is good," Plenković said.

He said that the fourth round of tax cuts would begin as of January 1, recalling that the general VAT rate would be reduced by one percentage point.

More news about the introduction of Euro can be found in the Business section.

Thursday, 20 June 2019

Plenković Discusses Accession to Eurozone with Dombrovskis

ZAGREB, June 20, 2019 - Prime Minister Andrej Plenković met with European Commissioner for Euro and Social Dialogue Valdis Dombrovskis in Brussels on Wednesday afternoon and discussed Croatia's preparations to enter the European Exchange Rate Mechanism (ERM II) and the eurozone.

The ERM II is a sort of waiting room for entry into the eurozone and each country has to remain in it for at least two years.

During a recent visit to Croatia outgoing European Commission President Jean-Claude Juncker said that Croatia was completely prepared to join the ERM II mechanism soon.

The European Central Bank decides on whether a country can join the ERM II or eurozone.

According to the latest convergence report of May 2018, which the EC releases every two years, Croatia has met all the criteria except one to enter the eurozone and that is to participate in the ERM II for at least two years.

Croatia can expect to join the eurozone in 2023 at the earliest.

After the meeting with Dombrovskis, Plenković is expected to attend a reception for Croatian Statehood Day which is being organised by three diplomatic missions in Brussels.

On Thursday, he is due to attend a meeting of the European People's Party and an EU summit, as well as a meeting with five prime ministers to discuss the appointment of new heads of European institutions.

More news about the introduction of the euro can be found in the Business section.

Saturday, 15 June 2019

HNB: Croatian Banks Better Than Euro Area Average

ZAGREB, June 15, 2019 - Croatian National Bank (HNB) governor Boris Vujčić said on Saturday he expected to do very well in the Asset Quality Review before entering the Single Supervisory Mechanism (SSM) because their capital adequacy and liquidity was markedly above the euro area average and they left no doubt that the system was good and stable.

Speaking at the 25th Dubrovnik Economic Conference, he said the technical part of conducting the review was being arranged with the European Central Bank.

He said the names of the banks which would be reviewed should be known by the end of the month, after which the banks will be notified which data they need to prepare and the ECB has to invite applications for conducting the review.

Vujčić said a letter of intent for joining the European Exchange Rate Mechanism II was nearing completion and that it would be sent after an agreement with European partners. He would not speculate on dates but said it would happen "very soon".

The HNB said on May 27 that Croatia had sent a request to the ECB for establishing close cooperation in the oversight of credit institutions as part of the SSM.

The step is part of the procedure for Croatia's entry to the ERM II and then the euro area, the HNB said, adding that Croatia plans to enter the mechanism of close cooperation with the ECB and the ERM II at the same time.

The SSM is the first pillar of the banking union and it comprises the ECB and the national authorities of the participating. Participation is automatic for euro area member states and voluntary for those outside, which have to establish close cooperation with the ECB.

The SSM's main goals are to provide for the security and reliability of the European banking system and to contribute to financial integration and stability in the EU. Establishing close cooperation is a prerequisite for participating in the SSM, in which the ECB oversees credit institutions in the euro area.

More news about the introduction of euro can be found in the Business section.

Wednesday, 22 May 2019

Most Candidates Running in European Elections Support Euro Introduction

ZAGREB, May 22, 2019 - Croatian candidates running in elections for the European Parliament on Wednesday attended a panel discussion on euro introduction, and most of them supported it while the Independents for Croatia and the Croatian Sovereigntists were against.

Attending the event, organised by the Euractive youth network, were Tome Antičić (HNS), Dalija Orešković (START), Jozo Radoš (Amsterdam Coalition), Predrag Matić (SDP), Tomislav Sokol (HDZ), Robert Podolnjak (MOST), Irena Cajner Mraović (BM365), Ladislav Ilčić (Croatian Sovereigntists) and Tomislav Jonjić (Independents for Croatia).

Most candidates said they were in favour of euro introduction on the condition the necessary criteria were met and Croatia was ready.

Sokol (HDZ) said that analyses conducted so far showed that euro introduction would have a positive impact on the Croatian economy, a view with which Radoš agreed.

MOST's Podolnjak said that euro adoption was also a matter for citizens to decide. "We are not against euro introduction but believe that the timing should be right and that citizens should be given the opportunity to state their position in a referendum," Podolnjak said.

Orešković said her START party supported the introduction of the euro "but this is a matter of timing and open public discussion. Not everyone will win and some will lose so we should have clear information."

"Nobody is forcing us to enter the euro area, once our economy is ready, we will introduce the euro," said Social Democrat Matić.

Even though he recognises the benefits of euro introduction, Jonjić said that his Independents for Croatia party was against entirely abandoning the kuna.

"We are aware that it is more practical to travel without having to exchange money but we are nonetheless against strengthening all mechanisms that strengthen the EU," said Jonjić, whose position was supported by Sovereigntist Ilčić, who noted: "Greater powers should be given to national parliaments, not Brussels."

Asked why Croatia does not have any representative on the EP's committees on science or culture and education, MEP Jozo Radoš said that "Croatia has 11 MEPs and the EP has 22 committees so it is difficult to cover all the committees we would like to sit on."

Sokol added that one could fight, for example, for Erasmus+, also by sitting on other committees such as the Committee on the Budget.

Podolnjak said that he believed that Croatian students were disadvantaged in comparison with other students in the EU while Cajner Mraović (BM365) said that one should work on making Croatia more attractive to foreign students.

More news about the possible introduction of euro in Croatia can be found in the Business section.

Friday, 17 May 2019

MOST Party Wants Referendum for Introduction of Euro

ZAGREB, May 17, 2019 - Croatia still is not ready for the introduction of euro currency and citizens should be allowed to decide at a referendum whether they want the country to enter the eurozone, MOST leader Božo Petrov told a press conference on Friday.

"Croatia is still not ready to introduce the euro. It's time the government and HNB (Croatian National Bank) start telling the people the truth and not versions or interpretations of the truth," Petrov said, who is running in the election for the European Parliament.

In most of the countries that introduced the euro that caused a serious blow to citizens' standards due to prices increasing and the standard in Croatia is much lower than it is in those countries, he said.

"Apart from that, the government still hasn't conducted structural reforms that should secure the stabilisation of the country's finances and long-term stable economic growth. The only alleged reform that the government has implement is the pension reform which citizens rejected a few days ago," Petrov added.

At the same time, over the past two years the government has increased state spending by 20 billion kuna, meaning that it spends 20 billion kuna more on itself, he said.

"That is why I believe that the government and HNB's proposal to introduce the euro is irresponsible as is the way the government has been running the country over the past three years," Petrov underscored.

More news about the introduction of euro can be found in the Business section.

Thursday, 14 March 2019

EU Commission: Croatia Closer to Euro Area

ZAGREB, March 14, 2019 - The European Commission Vice-President for the Euro and Financial Stability, Valdis Dombrovskis, said in the European Parliament on Wednesday that Croatia's exit from the Excessive Macroeconomic Imbalance procedure was a step towards entry into the euro area.

The EC in February said that Croatia had overcome excessive macroeconomic imbalances, which Dombrovskis recalled at a plenary session of the European Parliament.

Croatia's economy still suffers from macroeconomic imbalances but they are no longer excessive. That's good news, especially in the context of Croatia's preparations for participation in the European Exchange Rate Mechanism and eventually membership in the euro area, Dombrovskis said during a debate on a draft resolution called the European Semester for Economic Policy Coordination: Annual Growth Survey 2019.

The European Semester was launched in 2011 with the aim of harmonising the member states' economic and budget policies. It is part of a wider reform of the economic management of the EU designed to guarantee the stability of the member states' public finances, encourage economic growth and prevent excessive macroeconomic imbalances.

Croatia had been among countries with excessive macroeconomic imbalances since 2014. In its latest report, the EC says that economic development has contributed to the gradual correction of the existing imbalances, notably those related to high levels of public, private and foreign debt. However, in order to maintain that situation, Croatia must continue implementing structural reforms.

More news about the introduction of euro can be found in the Business section.

Thursday, 28 February 2019

Introduction of Euro to Contribute to Long-Term, Sustainable Growth

ZAGREB, February 28, 2019 - Prime Minister Andrej Plenković said on Thursday that in line with a report by the European Commission of Wednesday, his government would step up preparations for the introduction of euro as the official currency because, among other things, it would contribute to Croatia's long-term sustainable economic growth.

Addressing the second session of the National Council to introduce the euro as the official currency in Croatia, Plenković said that accession to the euro area was one of the government's political goals and recalled that by signing the accession treaty with the EU, Croatia had very clearly assumed that obligation.

He said that the government's commitment to structural reforms was confirmed in yesterday's report by the European Commission, which states that Croatia has economic imbalances but no longer excessive ones.

"... We will step up preparations for the introduction of the euro... because we believe that it will contribute to Croatia's long-term sustainable growth, owing to stronger integration with the single EU market in all economic sectors and better coordination of economic policies with other euro area countries," said Plenković.

He said that the EC's report very clearly confirmed progress on four recommendations given last year, stressing that Croatia had never before experienced such progress.

The PM noted that based on the EC's assessment, Croatia was the only country to enter a higher category of member-countries, exiting the excessive macroeconomic imbalances procedure in which it had been since 2014.

Plenković said that the introduction of the euro meant that in a few years' time households and companies would be using the benefits of the world's second most important currency, which would additionally strengthen the economy and the financial system, and enhance citizens' financial security and investor confidence.

Consequently, we can expect higher living standards as was the case with other Central European countries after they introduced the euro, he said.

Plenković said that by joining the euro area and the Schengen area of passport-free travel Croatia would complete the process of its full integration with and affirmation in the EU.

Plenković claimed that the kuna-to-euro conversion would have a mild and one-off impact on consumer price growth as indicated by the experience of other member-countries where prices increased by a mere 0.23% on average.

He said that the government would define measures to follow the process of conversion, including mandatory pricing in both kuna and euros to prevent abuse such as price rounding up and unjustified price growth.

"In the past 14 years prices in the euro area have grown much less than in Croatia, and in the same period gross average salaries in the Central European countries that have introduced the euro have grown faster than in Croatia. Therefore, vocal slogans that we will get European prices and retain Croatian salaries are not true," said Plenković.

The head of the MHS trade union, Vilim Ribić, said ahead of today's meeting that he was in favour of introducing the euro but not at present. There is no need to rush the introduction of the euro because there is no efficient currency that is to the benefit of all EU countries, he said.

The president of the Croatian Employers' Association (HUP), Gordana Deranja, said that the introduction of the euro would be a major advantage for exporters as well as those with loans tied to the euro. She also said that in the context of the current appreciation of the kuna, the introduction of the euro would be good also for the tourism sector as tourists would get real value for their money.

More news about the introduction of the euro can be found in the Business section.

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