Croatia on track to adopt the euro – POLITICO

Croatia on track to adopt the euro – POLITICO #Croatia #track #adopt #euro #POLITICO Welcome to TmZ Blog, here is the new story we have for you today: Croatia is on track to adopt the single currency from 2023 after meeting a number of criteria, the European Commission and the European Central Bank announced on Wednesday. “Today marks a historic milestone in Croatia’s European journey, reflecting the determined efforts the Croatian authorities have made to meet the criteria for entry into the euro area,” Economy Commissioner Paolo Gentiloni said in a statement. a statement. “Croatia is within the reference values of the convergence criteria”, wrote the ECB in its own report by publishing a “positive assessment of Croatia in view of a possible adoption of the euro on January 1, 2023”. Croatia would become the 20th EU member to adopt the single currency. The decision is expected to be formalized by EU capitals on July 12, after EU leaders give their political endorsement at a summit in June and the European Parliament signs off in early July. Enter the club The Commission and the ECB are jointly responsible for assessing the readiness of EU countries to join the euro area against a number of legal and economic criteria. The assessment also covers the integration of countries into the euro zone. Countries must have a 12-month average inflation rate below that of the three best performing countries in the EU, plus a margin of 1.5 percentage points. In its assessment, the Commission used Finland, France and Greece, giving a reference value of 4.9%. Countries with 1.5 percentage points below the EU 12-month average inflation rate are considered outliers and excluded from this benchmark. Malta and Portugal, which have a rate 2.2 and 1.7 percentage points lower than the EU average of 4.4%, respectively, were excluded. In addition, countries must have long-term interest rates below the same top performers, plus a margin of 2 percentage points, giving a benchmark of 2.6%. They must also demonstrate relative exchange rate stability and observe the bloc’s European Exchange Rate Mechanism II for two years while staying out of a so-called excessive deficit procedure. Finally, countries must legally guarantee the independence of their central bank and prohibit monetary financing. Persistent worries While the Commission still has concerns about the business environment and corruption in the country, a senior EU official said that “commitments have been made and implemented by Croatia to improve the business environment business”. Despite the green light, the ECB called for Zagreb to continue its efforts to prepare for membership of the club. In particular, he raised concerns about the long-term sustainability of the country’s convergence of inflation rates and noted that “to prevent the build-up of excessive price pressures and macroeconomic imbalances, the convergence process must be supported by appropriate policies”. To put the debt-to-GDP ratio on a sustainable downward path, Croatia needs to implement fiscal reforms called for as part of the EU recovery plan, the ECB wrote, while calling for “economic policies geared towards stability and far-reaching structural reforms”. “We are quite happy with Croatia’s fiscal situation, not only because deficits would be below 3%, but also because we are reasonably happy with the long-term debt development,” the senior official said. of the EU. Rest of the class Other eurozone hopefuls failed to meet the required criteria, with Bulgaria failing to meet the price stability requirement – due to an average inflation rate of 5.9% – and Romania n ‘meeting none. The ECB report also assessed the progress made by the six other EU countries that have not yet adopted the single currency. It concluded that Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden had made limited progress since the last convergent report in 2020. “This is mainly due to the difficult economic conditions,” concluded the ECB. With Russia’s war on Ukraine weighing on growth and pushing up inflation in all member states, “it is too early to draw firm conclusions on how convergence paths will be affected.” This article is part of POLITICO Pro The one-stop solution for policy professionals fusing the depth of POLITICO journalism with the power of technology Exclusive and never-before-seen scoops and ideas Personalized Policy Intelligence Platform A high-level public affairs network If you have any query regarding content, please comment below. Thanks Click Here To Continue Reading from Source [ads2]