March 22 (SeeNews) - The European Stability Mechanism (ESM), the eurozone bailout fund, said on Wednesday that Croatia became its 20th member, as the ESM treaty entered into force for the Adriatic country.
The ESM entry follows Croatia’s adoption of the euro on January 1 and the ESM’s approval of Croatia’s application to become a member, ESM said in a press release.
“Through this accession, Croatia completes its integration within the euro area and it becomes part of a financial safety net with a firepower of 500 billion euro ($540 million),” ESM managing director Pierre Gramegna said.
The ESM was launched in 2012 to complete the architecture of the monetary union and ensure its financial stability, which is at the core of its mandate.
“The ESM adds an important layer of protection and security to the euro area, which now Croatia is also a part of. This will contribute to the stronger resilience of our financial system and the economy, which is a significant and tangible achievement,” Croatian finance minister Marko Primorac said in the press release.
Croatia subscribed to 3.7 billion euro of the ESM capital stock, with an initial contribution of 422.29 million euro to the ESM’s paid-in capital, which provides backing for the bonds and bills issued by the ESM. This amount will be paid in five annual tranches. As a country with a GDP per capita of below 75% of the EU average, Croatia benefits from a temporary correction that cuts its paid-in capital contribution by 233 million euro until 2035.
($ = 0.926 euro)