Joining Euro Area Would End Croatian Exporters’ Agony

Total Croatia News

ZAGREB, November 15, 2019 – Entering the euro area will mean “the end of the agony” for Croatian exporters as the threat of the kuna gaining will be eliminated and the same rules will apply as in other EU member states, a panel in Šibenik heard on Friday.

The panel on the impact of the introduction of the euro on exports was held as part of the 18th Croatian Bank for Reconstruction and Development conference on export stimulation.

Finance Minister Zdravko Marić said Croatia could introduce the euro in 2023 but that this was not only up to it.

Croatia has to meet 19 benchmarks to which it committed in the letter of intent to join the Exchange Rate Mechanism (ERM II) and the letter on close cooperation with the European Central Bank (ECB), which envisages stress tests for Croatia’s largest banks, he said.

Everything will be finalised by the end of Croatia’s presidency of the Council of the EU next June, he added.

Croatian National Bank deputy governor Sandra Švaljek said the conversion exchange rate would be known six months before Croatia joined the euro area. It will be agreed with the ECB and the area’s member states, but it is much more important to define the central parity, which will happen before joining ERM II, she added.

Švaljek said it was necessary to work on as optimal an exchange rate as possible when Croatia joined the euro area, adding that a depreciation of the kuna would suit exporters but not those who owed money in euros.

Marko Jurčić of the Croatian Chamber of Commerce said joining the euro area would mean “the end of the agony” for exporters, given their constant appeals for the weakening of the kuna, as the exchange rate would no longer impact their competitiveness and they would play by the rules in force in other EU member states.

The introduction of the euro does not mean the economy will grow or fall as some countries that do not have the euro, such as Czechia and Poland, are recording strong growths, Jurčić said.

Introducing the euro is a political decision that will eliminate many risks but exporters need help in many other ways, he added.

The president of the board of Slovenia’s Export and Development Bank, Sibil Svilan, said the euro and Europe were no longer sacred and that when it was introducing the euro, Slovenia, as an export-oriented country, knew it was the right decision.

He said it was important that Slovenia’s decision to introduce the euro was made at a referendum, which gave legitimacy to everything that happened later on, such as higher prices. He also recalled that upon introducing the euro, Germany was hit by a recession.

Dagmara Zawadzka of Poland’s development bank said exports and the internationalisation of doing business were very important for an economy’s development, noting that Poland was recording strong export growth.

She said Poland would not join the euro area in the near future and that the exchange rate risk was not a big problem for large companies. Introducing the euro would significantly help most SMEs in Poland, for which said risk poses a significant barrier, and they would profit from joining the euro area, she added.

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


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