Prime Minister’s announcement about introduction of the euro draws mixed reactions.
After President Kolinda Grabar Kitarović in April last year announced that Croatia would adopt the euro by 2020, the same goal was stated by Prime Minister Tihomir Orešković during his visit to Berlin on Tuesday. His opinion is that Croatia could start the process of introducing the euro in two years, and that in four years the national currency could be replaced by the euro, reports Večernji List on March 3, 2016.
In order for a country to adopt the euro, it must have stable prices, sound public finances, a stable exchange rate and favourable interest rates, and Croatia is moving further away from many of the criteria with each passing day. One of the biggest obstacles is high public debt, which would have to be at least a hundred billion kuna smaller than the existing debt. Although he is a big supporter of the euro, Croatian National Bank Governor Boris Vujčić does not believe that the goal can be achieved so quickly. He would be pleased if Croatia would enter the exchange rate mechanism by 2022.
Vujčić confirmed that he had spoken with the Prime Minister about the subject, and assumes that the Prime Minister meant that in four years Croatia could launch the first phase of the process. Finance Minister Zdravko Marić pointed out that Croatia had committed to the introduction of the euro when the criteria are met, but he did not want to talk about deadlines, aware that a lot depends on the reduction of public debt. Even when a country has fulfilled all the conditions for the adoption of the euro, it first enters the so-called exchange rate mechanism where it spends at least two years.
Ivan Lovrinović (MOST) sees the Prime Minister’s announcement as “an accelerated path towards the Greek scenario” and points out that Croatia will not be ready even to talk about the euro for at least ten years. “We must not get ahead of ourselves because having a currency is one of the key tools in the context of the overall European policy to maintain competitiveness of the national economy, although the central bank and Croatia have never used that tool. Fast adoption of the euro would bring advantages only to banks and importers. The whole economy would enter the Greek scenario”, says Lovrinović.
Gordan Maras (SDP) did not miss the opportunity to say that advisers should have briefed the Prime Minister a little bit better. “We need to meet certain criteria regarding the public debt. It will take some time to reach that target, and I think it is not realistic. I would like for the Prime Minister to explain how he plans to achieve it.”
Ivan Šuker (HDZ) defended the Prime Minister saying that it is always easiest to say that something cannot be done. “The European Commission has recently sent a clear message to those who thought they had achieved something, and it is evident they have not done anything. That was a message that these reforms must finally be implemented. We aim to reduce the deficit below three percent, to curb the growth of public debt and to reduce it”, says Šuker.