Is Croatia ready to join the Euro?
Croatia has been working towards joining the most common currency on the European continent: the Euro. Croatia, along with Bulgaria, are now in the final stage of the joining process. This stage, called the European Exchange Mechanism or ERM-2, lasts for two years as a “waiting room” of sorts. This waiting period is a chance for Croatian authorities to enforce strong economic policies to preserve fiscal stability (Thomas, M). Some economic goals must be met too, such as lowering public debt, as well as getting the budget deficit below 3% of GDP (Gabrić, T). These seemed feasible, but some obstacles, such as the COVID-19 pandemic and some sizable earthquakes may have added an extra year in the ERM-2.
In 2020, public debt will increase due to the pandemic, seeing a 13% increase from the end of 2019 to the end of 2020 (Reuters.com). Neoliberal economists express positive outlooks on this change, stating that its economy has already been permeated by the Euro.
Joining Euro means that there is a possibility of cheaper borrowing and easier access to money to help aid sustainable infrastructure projects. Economic professor Ljubo Jurčić has opposing views. “Foreign goods are cheaper due to the exchange rate, it is not worth producing here at all.” “We have further buried ourselves at the bottom of the EU and are becoming part of the infusion drip of Europe, depending on aid funds for poor countries.” (Gabrić, T). The central exchange rate will be 7.53 Kunas to 1 Euro, when Croatia leaves the ERM-2. The projected entrance date now is January 1st, 2024.
Gabrić, T. (2020, October 13). What will the Euro effect be in Croatia? Retrieved February 12, 2021, from https://www.balcanicaucaso.org/eng/Areas/Croatia/What-will-the-Euro-effect-be-in-Croatia-205473
Reuters.com. (2021, January 14). Croatia hopes to JOIN euro in 2023 despite fiscal challenges. Retrieved February 12, 2021, from https://www.reuters.com/article/croatia-euro/croatia-hopes-to-join-euro-in-2023-despite-fiscal-challenge-idUKL8N2JP2VT
Thomas, M. (2020, July 11). Goodbye kuna! HELLO EURO! – Croatia to introduce the euros as official currency from 2023. Retrieved February 12, 2021, from https://www.thedubrovniktimes.com/news/croatia/item/9381-goodbye-kuna-hello-euro-croatia-to-introduce-the-euros-as-official-currency-from-2023