Croatia Considering Whether to Join Eurozone

Total Croatia News

Deputy Prime Minister talks about the future of kuna and its exchange rate.

Deputy Prime Minister and Minister of Economy Martina Dalić said on Saturday that the time was right for Croatia to begin to analyze advantages and disadvantages of possible entry into the eurozone, reports Nacional on February 4, 2017.

“We are currently in a period in which there are proposals that we should enter the euro area, not only because it is one of the commitments that we accepted with our accession agreement, but also because of the economic environment and economic trends, as well as an increase in the general sense of insecurity in global relations. We believe that the time is right for Croatia to begin to analyze, think about and define specific advantages and disadvantages of accession to the eurozone”, said Dalić in a radio interview.

She was also asked about recommendations of the President’s Council for Economic Affairs, which proposed a moderate depreciation of the kuna against the euro up to 2 percent per year over 5 years. “As for the exchange rate, it is a result of the flow of foreign currencies. We are a small, open economy and the growth of the economy and the growth of tourism influence the size of these flows. It is very important to point out that with the deficit reduction, which reduces the need for new borrowing, the state is contributing less than it used to be the case to foreign exchange flows. The rest are real economic developments, and the Croatian National Bank intervened in December with nearly 800 million euros attempting to mitigate the appreciation pressures”, said Minister Dalić. She stressed that the policy of the government was the stability and predictability of all elements of the economic system, and in that sense, “predictability and stability of the exchange rate has a significant contribution”.

Asked about rumours that she could be the next Governor of the Croatian National Bank (HNB), Dalić said that “there are various rumours, but I did not hear this one”, stressing that the quality and independence of the institutions was an important factor in the stability of the overall economic system. “The independence of the HNB is also an important element of stability of our economy and its future growth and development”, she said.

Dalić said it was very realistic that Croatia could leave the excessive deficit procedure in July, saying that the criteria set out in the framework of the procedure had been fulfilled. “The moment when the excessive deficit procedure will end depends on the recommendation of the European Commission and the European Council decision in July. I certainly expect that such recommendation and decision could be made, because we have basically fulfilled the criteria regarding the budget and fiscal policy, which are the most important for the excessive deficit procedure”, said Dalić.

Speaking about the reported crisis in Agrokor, the major Croatian privately-owned company, Dalić said that people “should not be governed by speculations”. “Agrokor is undoubtedly our largest company, in terms of employment and other indicators. We in the government expect that any company operating in Croatia will adapt to market conditions, and we expect the same from Agrokor. Speculations in the business world are not good, and we should stick to the real facts and figures”, concluded Dalić.


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