It is a question many tourists ask after Croatia joined the European Union close on one year ago – when will the euro currency come into effect? According to a report assessing readiness of nations to join the euro currency area released by the European Commission on Wednesday, it may be a while before the Croatian kuna is replaced by the euro, with the 2014 Convergence Report suggesting Croatia currently only meets two of the five criteria required for admission to the euro area…
The 5 criteria that a member state needs to meet include:
1. Inflation – must not exceed the inflation rate of the three member-countries with the lowest inflation by more than 1.5%
2. Budget deficit – must be below 3% of the nations Gross Domestic Product
3. Public debt – must be below 60% of the country’s GDP
4. Long-term interest rates – must not exceed the interest rate of the three member-countries with the lowest interest rates by more than 2%
5. Exchange rate stability – participation in the European Exchange Mechanism
Currently Croatia meets criteria points 1. and 4., but fails on 2., 3., and 5. The 2014 Convergence Report assessed the readiness of Bulgaria, the Czech Republic, Croatia, Lithuania, Hungary, Poland, Romania and Sweden, and says Lithuania will be next to adopt the euro on 1 January 2015 after meeting all criteria.
“Croatia will not introduce the euro tomorrow or in a year or two,” said Croatia’s Prime Minister Zoran Milanovic earlier this year, adding that Croatia was a small country and needing to be very carefull about introducing the currency.