PM: It would be easier if we were in euro area



Zagreb, 070520.
Nacionalna i sveucilisna knjiznica, Ulica Hrvatske bratske zajednice.
Predsjednik Vlade Andrej Plenkovic predsjedao petom sjednicom Nacionalnog vijeca za uvodjenje eura kao sluzbene valute u Republici Hrvatskoj.
Na fotografiji: Andrej Plenkovic.
Foto: Damir Krajac / CROPIX

PM Andrej Plenkovic

It would be much easier for Croatia in the current situation if it were a member of the euro area, Prime Minister Andrej Plenkovic said on Thursday at a session of the national council for introducing the euro as Croatia's official currency.

"If Croatia were in the euro area now, during this unprecedented crisis caused by the coronavirus pandemic, we would have financing in crisis situations via the European Stability Mechanism, which provides loans for euro area members and its capacity is €700 billion."

The European Central Bank's monetary incentives for the state and the private sector would also be available and we would have no exchange risk for households and companies, Plenkovic said, adding that exchange costs would disappear and Croatia's credit rating would jump by two levels.

The preparations for joining the European Exchange Rate Mechanism II have significantly contributed to the current investment rating, he said, adding that as a euro area member, Croatia would also have better financing options.

High euroisation

Plenkovic said Croatians saved primarily in euros and that such savings never dropped below 66%, standing at 71% on average in the past eight years.

As for borrowing, the share of loans in the national currency with a euro clause is 47%, or 54% on average in the past eight years. 

Also, Plenkovic said, 61% of nights are generated by tourists from the euro area and 57% of commodity exports are made to the euro area.

Next steps

As for the next steps in the process of joining ERM II, he mentioned that a letter on the implementation of reforms which Croatia committed to would be sent in the next few days, to be followed by a response on Croatia's compliance and confirmation of possible ERM II accession.

Croatia will then apply for accession, which will be followed by a decision on the accession, which Plenkovic hopes will occur by mid-July.

After the accession, in order to be able to apply for the euro area, it is necessary to meet the Maastricht criteria, which Croatia has managed to do before the latest crisis.