Croatian National Bank Governor Boris Vujcic announced on Thursday that Croatia would adopt the euro on Jan. 1, 2023.
“Although the outbreak of the COVID-19 pandemic hit the Croatian economy and public finances hard, we are working on a National Plan to replace the Croatian kuna with the euro,” Vujcic said at a televised conference in coastal city Opatija.
The governor noted that the Croatian National Bank is working closely with the government on the plan which will regulate the process of the euro adoption. It would deal with different issues such as the conversion of deposits and loans, adjustment of interest rates, and recalculation of prices. The plan, he said, should be presented soon and implemented in the autumn.
Although polls show that some people are afraid that the introduction of the euro will lead to an increase in prices and a lower living standard, the governor said it is not the truth.
He said experience in other countries that have replaced their currency with the euro is different and that the living standard there went up.
Croatia was admitted in July into the European Exchange Rate Mechanism (ERM II), a preliminary stage for entry into the eurozone. The central rate of the Croatian kuna is set at 1 euro to 7.53 kuna. A country has to spend at least two years in ERM II before joining the eurozone.
Vujcic said Croatia is committed to implementing additional measures to combat money laundering, further reduce administrative and financial burdens on the economy, and improve corporate governance in state-owned enterprises.
He stressed that Croatia has been fulfilling all the criteria for nominal convergence since 2016, but that the crisis caused by the pandemic will temporarily make it more difficult to meet the fiscal criteria.
The governor said also on Thursday that he expects a 10 percent drop in Croatia’s gross domestic product this year, and a strong six percent growth in 2021.