Croatia plans to introduce euro by end of next gov't term: PM

Croatian Prime Minister Andrej Plenkovic announced here on Tuesday that the country is to introduce the euro by the end of the next government's term.

"By introducing the euro, Croatia permanently gets rid of currency clause risks. The cost of conversion will be permanently eliminated, and it is also important for businessmen to emphasize that the use of the common currency permanently contributes to strengthening international exchange and competitiveness," Plenkovic said at a conference organized by the Croatian Chamber of Commerce.

Plenkovic said Croatia has the highest number of euro deposits of all non-euro area countries, and that the average household savings is 76 percent in euros. The Croatian currency is the Kuna.

According to the prime minister, Croatia plans to enter the ERM II exchange rate mechanism, a precondition for joining the 19-member eurozone, in the second half of next year.

Croatia then will spend between 30 and 36 months in the mechanism and entry into the euro area is expected in January 2023 at the earliest or in January 2024.

Croatian Chamber of Commerce President Luka Burilovic said that Croatia would benefit greatly by introducing the euro, as it would reduce the cost of capital.

"The euro is not a magic wand and a universal remedy for economic problems, but should be used as an addition and a generator for achieving strategic goals," Burilovic said.