Finance Minister Zdravko Maric said on Friday it was necessary to invest a lot of effort and meet all the requirements to introduce the euro, adding that introducing it in Croatia on 1 January 2023 was realistic and that citizens must be informed as much as possible about the advantages and disadvantages.
Speaking at a conference on the financial market in Opatija, Maric said a lot had been done but that there were still many technical and operational activities to undertake.
“The euro is a good indicator of how, by combining the monetary and fiscal policies, one can go in the right direction. We committed to the euro by joining the EU, but when we will introduce it depends on meeting the criteria. Had we not embarked on public finance consolidation, we wouldn’t have been able to arrive at this phase”
Maric said that after entering ERM II Croatia committed to meeting the benchmarks in four areas and that they included convergence criteria and the Maastricht criteria.
He said inflation, which was 3.1% in August in Croatia and 3.2% in the EU, was not expected to jeopardise Croatia’s euro area entry and that the government was carefully monitoring it.
Maric went on to say that this year’s deficit was still projected at 3.8% of GDP and that revenues were a little better than expected, although there was significant pressure on the budget’s expenditures side.
He announced a revision of the 2021 budget for the middle or second half of this month, together with a draft of the 2022 budget.
Speaking of budget revenues, Maric said they were helped by the tourist industry, but other activities also, and that GDP was growing faster than planned.
He said the government projected a 7% GDP growth for this year and that it would present its projections in two to three weeks.
Asked about the health system, Maric said the reform must focus on expenditures, adding that Health Minister Vili Beros would propose a solution and that the system must be financially viable.
“This year it is key to remain outside the excessive deficit procedure, which I think we’ll manage to do. For next year the deficit estimate is… 2.5% of GDP and for the year after that below 2%. We will meet those criteria.”
Maric said the public debt was decreasing and that the pace of its decrease was more than two and a half times better than required by the Maastricht criteria.
He underlined the importance of informing and protecting consumers and increasing financial literacy, and said that all potential conversion costs should not be covered by citizens but the finance industry.
Asked if the budget would envisage funds for full pay during parental leave, Maric said demography was a priority but that further steps would depend on possibilities.
The financial services sector has successfully recovered from the initial impact of the pandemic, said Ante Zigman, president of the Steering Council of the HANFA regulator, adding that pension funds were the most stable given the relative stability and predictability of net payments.
System risks are increasing but a stress test of the finance industry has shown that the financial system is stable, secure and resilient, he said.
The upcoming adoption of a law on alternative investment funds will greatly liberalise their market for potential investors, which should give enterprises access to much more favourable financing for new products and research, Zigman said.