European Commission Supports Croatia’s Introduction of Euro

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ZAGREB, October 29, 2018 – Valdis Dombrovskis, the European Commission vice-president for the euro and social dialogue, said on Monday the Commission supported Croatia on its journey to the euro area, not just politically, but also through a structural reform programme, noting that economically 2018 was a good year for Croatia.

The Commission can help countries working on introducing the euro technically and financially, he said after meeting with Prime Minister Andrej Plenković and cabinet ministers.

At the meeting we discussed economic and fiscal matters and it must be said that 2018 has been a good year for Croatia. The economy shows robust growth, close to 3%, which is the European Union average, Dombrovskis told reporters, adding that a budget surplus was also recorded.

He said the government had announced its intention to join the Exchange Rate Mechanism (ERM II) in 2020 as a step towards introducing the euro, calling this a sort of waiting room before joining the euro area. Countries usually spend two years in ERM II but it may be longer.

Commissioner welcomes pension and other reforms

Dombrovskis underlined the need for awareness of the importance of structural reforms, saying they played an important role, not just for joining but also successfully participating in the euro area. He added that countries which intend to join must show a certain economic resilience.

He welcomed the reforms which have been launched, including the pension and education reforms, the strengthening of the financial sector, and efforts to reduce non-performing loans and to bolster the financial situation and sustainable economic growth. Dombrovskis also pointed to the macroeconomic imbalances which still exist in Croatia.

Finance Minister Zdravko Marić said the government was aware of the job ahead, such as dealing with unemployment. He added, however, that it was very important for Croatia to have exited the Excessive Deficit Procedure.

Agriculture Minister Tomislav Tolušić said Croatia “is doing its job, with which the European Commission is happy.”

Euro adoption strategy

Dombrovskis arrived in Croatia for a two-day working visit and is due to be received by President Kolinda Grabar-Kitarović. He will meet parliamentarians and hold a roundtable discussion on the introduction of euro and the European budget at the Zagreb Faculty of Economics.

A year ago, the government and the Croatian National Bank (HNB) launched a document entitled “The Strategy for the Adoption of the Euro in the Republic of Croatia”. On that occasion, Prime Minister Plenković said that his cabinet had set two important goals: one of them is to make Croatia prepared in 2019 to join the passport-free Schengen zone, and the other is to enable Croatia to join the euro area. Plenković said then that his cabinet’s target would be to enable Croatia to enter ERM II in 2020 when Croatia will hold the rotating EU presidency from 1 January to 30 July.

I don’t want to speculate on the date for the adoption of the euro. What is realistic and what we are working on is to make sure that 2020, when Croatia chairs the rotating presidency of the Council of the EU, is the year Croatia can become part of ERM II, he said at the presentation of the strategy on 30 October 2017.

If you want to more known about relations between Croatia and the European Commission, click here.


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