We find out from this article that Croatia is ready to embrace the glorious Eurozone from 1st January 2023. Moment of joy and exuberant optimism for Croatia, which is translating this into some really nice words:
"The introduction of the euro will strengthen our economy, it will be an anchor of stability, will make us more resistant and protected from external shocks and crises and will contribute to the improvement of investment climate," said Finance Minister Marko Primorac, announcing the spending plans.
Absolutely. Greece was also thinking about this, not so long ago.
Greece faced a sovereign debt crisis in the aftermath of the financial crisis of 2007–2008. Widely known in the country as The Crisis (Greek: Η Κρίση), it reached the populace as a series of sudden reforms and austerity measures that led to impoverishment and loss of income and property, as well as a small-scale humanitarian crisis.[5][6] In all, the Greek economy suffered the longest recession of any advanced mixed economy to date. As a result, the Greek political system has been upended, social exclusion increased, and hundreds of thousands of well-educated Greeks have left the country.[7]
Croatia will, starting with the next year, give up their financial independence and join the club led by one of the famous central banks in the world, the ECB. The same central bank that flooded Europe with freshly printed euros for the last decade. Only in the last 3 years they bloated their balance sheet with more than 4 trillions euro. They manage to produce a inflation rate of around 12% now in the European Union, with no end in sight. They failed to keep the inflation under (the famous target of) 2%. But no worries, Croatia thinks this the ECB team (in conjunction with the one in Bruxelles) would do a better job than their own people.
Meanwhile, another famous actor in the Eurozone, Italy, is facing a rising cost in terms of government borrowing: during the last year, their 10yr bonds had a flight from 1.2% to more than 4.7%. And not so long ago, thanks to the ECB interventions, they even borrowed at 0.5%. But those moments are gone now, and inflation generated by the generous central bank printing machine is taking its toll. This will rise the borrowing costs further, which in turn will force ECB to print even more money to cover these costs. Which in turn will induce even more inflation. And so forth…
Why the ECB keeps doing that? Simple, because there is no other choice. If ECB stops printing money for the highly indebted countries of Eurozone (e.g. Italy, Spain, France, Greece), then it’s game over and bye bye euro. And that’s not admissible at that level. What it’s admissible though, it’s throwing under the bus the European citizens, which will drown in more poverty and crisis.
So, Croatia thinks they will be fine. We wish them good luck. But unless their economy is not on the same level with Germany or the Netherlands, then the future doesn’t look too bright. And losing buying power will be one of the first things felt, when their salaries will be converted to euro.
At last, but not at least, their euro budget was adopted not with a majority:
This first-of-a-kind budget calculated in euros was adopted with 77 votes in favour and 50 against in Zagreb's 151-seat parliament.
Also, their optimism about the next year is contagious:
It predicts that Croatia's economy will grow by 0.7% in 2023, with the government chalking up a deficit of 2.3% of gross domestic product (GDP).
Christine Lagarde has nothing to do but smile.
