Connect with us

Croatia

#ECB to test five Croatian banks as country aims for euro entry

SHARE:

Published

on

We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. You can unsubscribe at any time.


The European Central Bank said on Wednesday (7 August) it would carry out a stress test of five Croatian banks, a preliminary step in Zagreb’s bid to join the eurozone,
writes Francesco Canepa.

Zagrebačka banka, Privredna banka Zagreb, Erste & Steiermärkische Bank, OTP banka Hrvatska and Hrvatska poštanska banka will all be tested, with results expected in May 2020, the ECB added.

Croatia last month submitted a formal bid to join the European Exchange Rate Mechanism (ERM-2), an early stage on the path to membership of the euro currency.

Share this article:

Croatia

Commission approves 2022-2027 regional aid map for Croatia

Published

on

The European Commission has approved under EU state aid rules Croatia's map for granting regional aid from 1 January 2022 to 31 December 2027 within the framework of the revised Regional aid Guidelines (‘RAG'). The revised RAG, adopted by the Commission on 19 April 2021 and entering into force on 1 January 2022, enable member states to support the least favoured European regions in catching up and to reduce disparities in terms of economic well-being, income and unemployment – cohesion objectives that are at the heart of the Union. They also provide increased possibilities for member states to support regions facing transition or structural challenges such as depopulation, to contribute fully to the green and digital transitions.

At the same time, the revised RAG maintain strong safeguards to prevent member states from using public money to trigger the relocation of jobs from one EU member state to another, which is essential for fair competition in the Single Market. Croatia's regional map defines the Croatian regions eligible for regional investment aid. The map also establishes the maximum aid intensities in the eligible regions. The aid intensity is the maximum amount of State aid that can be granted per beneficiary, expressed as a percentage of eligible investment costs. Under the revised RAG, regions covering the entire population of Croatia will be eligible for regional investment aid. A press release is available online.

Share this article:

Continue Reading

Agriculture

Commission approves €22.7 million Croatian scheme to support the primary agricultural sector affected by the coronavirus outbreak

Published

on

The European Commission has approved a €22.7 million (HRK 171m) Croatian scheme to support companies active in certain primary agricultural sectorsaffected by the coronavirus outbreak. The scheme was approved under the State Aid Temporary Framework. Under the scheme, the aid will take the form of direct grants. The measure will be open to horse breeders, cattle, pig and poultry producers as well as to companies active in the sheep and goat sector. The scheme aims to address the liquidity needs of the beneficiaries and to help them continue their activities during and after the outbreak. The measure is expected to benefit more than 21,800 companies.

The Commission found that the Croatian scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid (i) will not exceed €225,000 per beneficiary; and (ii) will be granted no later than 31 December 2021. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measure under the EU state aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.100417 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

Advertisement

Share this article:

Continue Reading

Bulgaria

Bulgaria and Romania are moving away from the eurozone, as Croatia gets on track for the single currency

Published

on

Bulgarian economist Professor Boian Durankev said that the significant budget deficit will prevent Bulgaria from joining the eurozone in the near future. Durankev added that in order to ready the country, the whole of the Bulgarian economy and society must change, writes Cristian Gherasim, Bucharest correspondent.

The Bulgarian government forecasts economic growth of 3.5% this year and inflation of 2.5%. "The inflation rate is officially over 2%”. He added that "forecasts indicate that the economy has the potential for some change, but the country is heading for a significant budget deficit, which will prevent us in the coming years, at least until 2025, from joining the eurozone ", explained Prof. Durankev . He commented that the eurozone has undeniable advantages, including stronger support in the event of crises such as the pandemic.

On the other hand, Croatia is doing much better. Croatia is on track to adopt the euro by 2023, as long as it meets the criteria set by the European Commission, said Valdis Dombrovskis, the European Commission's executive vice president. "The euro will be a great advantage for Croatia, as it is now for Europe. These developments must be carefully monitored and managed," said the European official.

Dombrovskis warned Croatia that it should be cautious about the effects of the pandemic on the economy, especially the low level of vaccination, which could lead authorities to adopt new restrictions, although the pace of recovery in the Croatian economy is good.

Advertisement

Croatia will only be able to introduce the euro once all the convergence criteria have been met. If met in 2022, the EU Council will decide whether the state will join the euro on January 1, 2023, said the European Commission's executive vice president.

The governor of the Central Bank of Croatia, Boris Vujcic, also recently said that Zagreb could meet all the criteria for joining the eurozone sooner than expected. The temporary suspension of the deficit limit for EU member states due to the coronavirus pandemic should help Croatia fulfill, sooner than expected, a key condition for becoming a eurozone member, Boris Vujcic said.

Croatia, a country that relies heavily on tourism more than any other EU member state, has been affected by travel restrictions introduced in the wake of the coronavirus pandemic. "We have a situation this year in which the European Commission has suspended excessive deficit procedures for all Member States. In this context, we need to think about the date of Croatia's accession to the euro area," Boris Vujcic said at a meeting of central bank governors. Candidate countries for accession to the euro area must prove the soundness of public finances, that inflation is under control and the exchange rate is stable before they can switch to the single currency.

Advertisement

Euro favorability and readiness in the region

Romanians top the chart of euro currency favorability, with 75% of them wanting the euro switchover, up from 63% last year.

According to the Flash Eurobarometer, Romanians are followed by other eastern and central European nations, with 69% of Hungarians, 61% of Croats and 54% of Bulgarians favoring the single currency.

The survey was carried out in the seven member states that have not adopted the single currency: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden.

“Across the seven countries, 57% are in favour of introducing the euro, while 40% are against. There is wide variation at country level: three quarters are in favour of introducing the euro in Romania, but in Czechia and Sweden, a majority of respondents are against the idea of introducing the euro”, the survey points out.

Across all countries, except the Czech Republic, there has been an increase in the proportion of those in favor of introducing the euro compared to 2020.

Yet, most respondents in each country think introducing the euro will increase prices and are concerned about abusive price setting during the changeover.

While Romanians lead in terms of favorability towards the euro they are also much aware of their fiscal unreadiness, with 69% of the population saying that their country is not prepared to join the Eurozone.

In order to become part of the Eurozone a country must meet a set of criteria, with Romania no longer fulfilling the requirements according to last year’s European Commission report on euro convergence.

Romania has moved back and forth on various phases of the accession process over the past 14 years since it became part of the EU, outlining plans and setting numerous deadlines for joining the eurozone. The country lags behind in its readiness to adopt the single currency. Romania previously set 2024 as a deadline to join the Eurozone but the odds are slim for that to happen.

Bulgaria and Croatia have been admitted in the Exchange Rate Mechanism (ERM II), the first step in joining the euro, though Bulgaria is now backtracking on its progress.

Sweden remains one of the most prepared countries in switching to the euro. Yet joining the Exchange Rate Mechanism requires public approval. On 14 September 2003 56% of Swedes voted against adopting the euro in a referendum, with political parties pledging to abide by the result of the referendum.

All member states of the European Union, except Denmark which negotiated opt-outs from the provisions, are obliged to adopt the euro as their sole currency once they meet the criteria.

Share this article:

Continue Reading
Advertisement
Advertisement

Trending