Ju­bi­lant Croa­tia also wants to win big, in the eu­ro­zone

Irish Examiner - - Business - Michael Win­frey, Jas­mina Kuz­manovic and Gor­dana Filipovic

Croa­tia is brim­ming with con­fi­dence, and its lead­ers think it’s time for the EU’s new­est mem­ber to join the eu­ro­zone.

A cab­i­net meet­ing in Zagreb, this week, kicked off with ev­ery min­is­ter proudly wear­ing the na­tional team’s jersey, in cel­e­bra­tion of the 2-1 World Cup vic­tory over England. Hav­ing joined the elite group of na­tions that have made it to the final, Croa­tia’s par­lia­ment backed a pro-euro cen­tral bank gov­er­nor, Boris Vu­j­cic, for a new, six-year man­date.

Many of the EU’s poorer coun­tries see the euro as a way to an­chor their place in an in­creas­ingly di­vided al­liance. While some of the ex­com­mu­nist na­tions — Poland, the Czech Repub­lic, and Hun­gary — have no firm plans to switch to the euro, oth­ers are ea­ger to join. Bul­garia and Ro­ma­nia are in var­i­ous stages of prepa­ra­tion.

“En­ter­ing the eu­ro­zone should be good for Croa­tia,” said Zeljko Lovrince­vic, pro­fes­sor at the Eco­nomic In­sti­tute in Zagreb. “But the process may be dif­fi­cult,” he said. Mr Vu­j­cic’s re-elec­tion is bound to help prime min­is­ter, An­drej Plenkovic, who vowed to en­ter the euro’s an­techam­ber, known as ERM-2, by 2020. The big ques­tion is whether a cur­rency area that has just ti­died up af­ter the Greek debt cri­sis is will­ing to take in an­other Balkan mem­ber. De­spite be­ing tech­ni­cally ready, fel­low ex-com­mu­nist peer, Bul­garia, slowed down its plans to ap­ply for the ERM-2, af­ter get­ting the cold shoul­der from the ECB and the Euro­pean Com­mis­sion.

“En­try into the eu­ro­zone is the nat­u­ral next step and we be­lieve that Croa­tia will soon be­come a good can­di­date for the ERM-2,” Mr Vu­j­cic said, just hours af­ter his con­fir­ma­tion in par­lia­ment. “We are con­fi­dent that euro adop­tion will have a sig­nif­i­cant, pos­i­tive im­pact on the Croa­t­ian econ­omy,” he said. While be­ing richer than Bul­garia, Croa­tia doesn’t tick all the eco­nomic boxes for ERM-2 en­try. Even as its cur­reny, the kuna, is kept in a tightly con­trolled cur­rency band against the euro and though the gov­ern­ment ended last year with a bud­get sur­plus, it misses the so­called Maas­tricht re­quire­ments on in­fla­tion and debt, which was 78% of eco­nomic out­put in 2017, above the re­quired ceil­ing of be­low or head­ing to­ward 60%.

EU of­fi­cials have also be­come more cau­tious about ex­pand­ing the eu­ro­zone, fol­low­ing money-laun­der­ing scan­dals in places like Latvia and Es­to­nia. Al­though Croa­tia hasn’t had a ma­jor blowup in its mostly for­eignowned bank­ing in­dus­try, its big­gest com­pany, Agrokor, un­rav­elled last year, shaking lenders and caus­ing a deputy prime min­is­ter to re­sign.

■ Bloomberg

Picture: AP

Croa­t­ian fans cel­e­brate in Zagreb, Croa­tia, at the end of the semi­fi­nal match be­tween Croa­tia and England on Wed­nes­day.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.