July 13 (SeeNews) - Croatia could join the eurozone by the end of the four-year term in office of the country's new government, which is expected to commence by the end of July, prime minister Andrej Plenkovic has said.
A specific date for the euro adoption could be discussed only after there is some more certainty about it, Plenkovic said in a statement late on Friday, after the European Central Bank (ECB) said it is accepting Bulgaria and Croatia to the Exchange Rate Mechanism (ERM II), the mandatory training grounds for membership of the eurozone.
He pointed out that so far the experience of different countries in the process has been different, with Slovenia, Cyprus and Malta being the fastest, having spent in ERM II a little less than 3 years. On the other hand, the mandatory stay in the mechanism took Lithuania 10.5 years, making it the slowest country so far to go through the euro adoption process.
Plenkovic said that the ERM II entry has additionally strengthened Croatia's economic and financial prospects, and its reputation on foreign and domestic financial markets, which is expected to be reflected in the pending new estimates of the country's credit rating by the respective agencies.
In order to enter the eurozone, Croatia now needs to continue to fulfil the EU's Maastricht criteria for euro convergence, which include stability of the foreign exchange rate, prices and interest rates, while watching two other important indicators - the budget deficit and the public debt level, Plenkovic noted.
On Friday, the ECB said that at joining ERM II, the central exchange rate is set at 7.53450 Croatian kuna per one euro, with a standard fluctuation band of plus or minus 15% for both.
The ECB underlined that as part of the newly started process, along with pursuing economic policies that will preserve the economic and financial stability, and achieve a high degree of sustainable economic convergence, the Croatian authorities have also committed to implement specific policy measures on the anti-money laundering framework, the business environment, state-owned enterprises and the insolvency framework.
Plenkovic noted that according to certain parameters Croatia is already linked to the euro. For example, the share of household savings in euro has never been lower than 66%, while in the past 8 years it was 71% on average.
In addition, kuna credits with an euro clause typically make up 47% of total, with this share rising to 54% in the past 8 years.
Furthermore, some 61% of Croatia's tourism revenue is generated by travellers coming from eurozone countries, while some 57% of the country's trade exports go to eurozone member states.
Plenkovic's ruling centre-right Croatian Democratic Union (HDZ) won the July 5 general election with a better-than-expected result, grabbing 66 of 151 seats in parliament and leaving behind its main opponent - the Restart Coalition led by the Social Democratic Party (SDP), with 41 seats.
Plenkovic has said the new cabinet is expected to be formed by the end of July, after HDZ has secured the support of national minority parties and a couple of smaller liberal parties in parliament.