Croatian Ambassador Reflects on Smooth Euro Transition and Lessons for Bulgaria

Nearly two years after Croatia adopted the euro, hundreds of thousands of euros have been collected in fines for price abuses linked to the currency transition in 2023. Questions about penalties for unjustified price hikes, such as a hairdresser raising rates without reason, and broader changes in income and the economy have been addressed by the Croatian Ambassador to Bulgaria, Jasna Ognjanovac, in an interview with Nova TV.

The ambassador noted that Croatia faced no significant opposition to the euro, in part because it is a major tourist destination, welcoming over 21 million visitors last year, many from eurozone countries already familiar with the currency. At the time of adoption, 61 percent of Croatians supported the euro. The government had launched an information campaign a year before the switch to minimize confusion and fears among the public.

Ognjanovac highlighted similarities between Croatia and Bulgaria regarding their currencies. The kuna had previously been pegged first to the German mark and then to the euro, similar to Bulgaria’s lev. She stressed that joining the eurozone gives Croatia a voice in decision-making on interest rates and currency matters, whereas Bulgaria currently follows eurozone decisions without participating in the decision-making process. She added that being part of the eurozone provides protection for trade and currency, better borrowing conditions, and overall financial stability. One immediate benefit for Croatia has been achieving an “A” investment rating, which enhances economic credibility.

On the topic of inflation, the ambassador noted that Croatia entered the eurozone under difficult circumstances, with 11 percent inflation due to the pandemic, the war in Ukraine, and global supply issues. Since then, inflation has steadily fallen to around 4 percent, with only 0.2 percent of the rise attributable to the euro itself. She believes Bulgaria is entering the eurozone in a more favorable position, with much lower inflation.

Income growth has been substantial. Before the euro’s adoption, the average salary was around €1,000 in 2022, rising to €1,500 today. Labor productivity and GDP per capita have also increased significantly, from €12,000 in 2013 upon EU accession to €22,000 now. This reflects notable progress in the country’s economic development following EU and eurozone integration.

Croatia experienced some attempts by traders to exploit the transition, including supermarkets inflating prices instead of simply converting them to euros. The government responded with inspections and consumer protection measures, including a hotline for reporting price violations. Around €400,000 in fines were collected during the first two months after the euro’s introduction, demonstrating a firm stance against consumer fraud. The ambassador gave the example of a hairdresser fined €3,000 for unjustified price increases. Croatia also established a “white list” of transparent traders, guiding consumers toward fair practices.

Ognjanovac shared her personal experience during the transition, noting a smooth conversion process from kunas to euros at ATMs during the New Year, with no significant problems. She emphasized that while minor abuses occurred, the government was prepared, requiring traders to revert prices to pre-euro levels if increases were unjustified. After the first one to two months, these attempts ceased, and she expressed confidence that Bulgaria will manage its euro adoption smoothly as well.

Finally, the ambassador highlighted the convenience of using the euro in daily life, noting the savings and ease it provides compared with exchanging currencies. Overall, she described Croatia’s transition as successful, with careful planning and enforcement ensuring a smooth shift to the euro, despite minor challenges from price abuses. She concluded that a year from now, the process could be reviewed to confirm that everything remains under control and proceeding as planned.

Source: Nova TV

Further reading: Croatia's Ambassador to Bulgaria: The Most Important Advantage We have is our Membership in the EU #AmbassadorTalks