November 12, 2019 / 11:03 AM / a month ago

Croatia eying euro adoption by 2024, PM says

FILE PHOTO: Croatia's Prime Minister Andrej Plenkovic arrives to take part in a European Union leaders summit, in Brussels, Belgium July 2, 2019. REUTERS/Piroschka Van De Wouw

ZAGREB (Reuters) - Croatia’s strategic goal is to fulfill the necessary criteria and adopt the euro by the end of the next government’s term in office, Prime Minister Andrej Plenkovic said on Tuesday.

Earlier this year, Croatia sent a letter of intent to the European Central Bank to join the European Exchange Mechanism (ERM-2), a waiting room for euro adoption.

“Our plan is to join the ERM-2 in the second half of 2020m where we expect to spend two-and-a-half to three years. Then the euro adoption could follow at the beginning of 2023 at the earliest, or at the beginning of 2024,” Plenkovic told an economic conference.

He said that among the main benefits for Croatia from the euro adoption would be removal of currency risk, lower borrowing costs and stronger competitiveness of the economy.

Despite Croatia’s having its own currency, the kuna, most of its savings, around 75% on average in the last decade, were held in euros.

Croatia is making effort to keep its budgetary balance under control and to reduce the public debt towards 60% of gross domestic product in the next few years, which are among the key criteria to join the euro.

For next year, the government proposed a budget with a general budget surplus of 0.2% of GDP, rising to a surplus of 0.8% in 2022. Public debt is projected to fall from 71.3% of GDP at the end of this year to 61.6% at the end of 2022.

Reporting by Igor Ilic, editing by Larry King

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