Plenković On Euro Introduction: ”We’ll Be More Attractive To Foreign Investors”

Lauren Simmonds

Not everyone is over the moon about Croatia’s entry into the eurozone, but the PM continues to try to persuade nay-sayers.

“Our estimate is that the benefits to Croatia from the introduction of the euro are significantly higher than the costs, and therefore the CNB recommends that Croatia begins on the journey to the introduction of the euro,” said HNB Governor Boris Vujčić. He also pointed out that the Republic of Croatia is the smallest EU member state without the euro.

As Poslovni Dnevnik reports on the 30th of October, 2017, Prime Minister Andrej Plenković has stated that the government’s plan for Croatia is the first step towards the introduction of the euro as the country’s official currency, as well as Croatia’s entry into the exchange rate mechanism, the so-called ERM II.

Speaking at the beginning of the “Euro Implementation Strategy in Croatia” conference, jointly organised by the Croatian National Bank (CNB/HNB), the PM pointed out that this government has experience with the process of EU accession.

“As the newest member of the European Union, Croatia has two key political goals – to become part of the Schengen area, that is, to be ready for a political decision on it in 2019, and the second goal is to join the eurozone,” Plenković stated.

“I don’t want to bid about what date we want it to be on today. What I think is realistic and what we will be doing is, that by 2020, as the year of Croatia’s presidency of the EU Council, will be the year in which Croatia will, according to the intentions of our plan, join what is called ERM II (exchange rate mechanism),” the PM said.

He also added that there will be wide public debate on the introduction of the euro, which will be carried out in a dignified, decisive, open and transparent way, in order to address and eliminate all the fears and doubts surrounding the subject which is indeed very touchy for many people.

Plenković also noted that Croatia has already said ”yes” in its accession treaty, as far as the will of the citizens is concerned, to the eurozone, and that the only reason the country has not yet joined is because it has not met all the necessary criteria, adding that it has nothing to do with political decisions.

“There will be no worries about currency risks, there will be lower loan and transaction costs, we’ll be more competitive and attractive to foreign investors, there is a perception of inflation, it doesn’t really stand [hold water] that we’ll end up with European prices and yet preserve Croatian wages. This is a myth that needs to be eliminated,” Plenković concluded.

“The biggest benefit will be the abolition of the currency risk, which will be of utmost benefit to the entire economy, with over HRK 500bn (150% of GDP) with a foreign currency clause, no one except Croatia in the EU is exposed to currency risk so much, there will also be a fall in interest rates, reduced risks, lower transaction costs and a positive impact on investment incentives,” HNB’s Vujčić reassured.


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