INTERVIEW-Croatia determined to join euro zone despite crisis
Reuters - 09/09/2011 16:11:42
* FinMin: no second thoughts on Croatia euro zone entry
* Seeks private investments to help restore growth
* Wants to remain as FinMin if her party wins Dec polls
By Gabriela Baczynska
KRYNICA, Poland, Sept 9 (Reuters) -
Croatia is determined to eventually join the euro zone after its expected entry to the European Union in 2013, although the debt crisis in the currency bloc makes it difficult to estimate a timeframe, its finance minister said on Friday.
"The euro is a natural choice for Croatia since banks' and corporate balance sheets are now mainly in euros, 80 percent of retail deposits are in euros or other foreign currency," Martina Dalic told Reuters on the sidelines of an economic forum in Poland.
"Of course, I think the monetary union needs more rethinking and reforming, taking into consideration the experiences of the last 10 years, but we don't have much room for second thoughts. The fate of the euro will be the fate of our banks," she added.
Dalic said the former Yugoslav republic did not yet have a detailed euro road map and said the euro zone's debt problems, which have forced Greece, Ireland and Portugal to seek EU/IMF bailouts, meant it was difficult to say when Croatia could join.
"But at the end of the day, our goal in the EU is to eventually join the monetary union. The economic features and circumstances of the country are such that Croatia is a natural candidate," she said.
RESTORING GROWTH
Like many euro zone members, Croatia has been struggling to restore growth after its economy contracted over the last two years. This year the government forecasts growth of 1.5 percent, higher than analysts' and the International Monetary Fund's forecast of just 1 percent.
"The 1.5 percent is a forecast. I don't see a major difference between 1.3, 1.5 and 1.7 percent. The basic message is that the economy will grow after two years of negative growth and we see recovery in industrial production, personal consumption, retail trade and exports," Dalic said.
Dalic said the conservative government of Prime Minister Janka Kosor's HDZ party expected that public investment would help revive private investment and that entry to the EU would also attract more capital into the country.
"Our budget has been executed in line with the plan and our goal is to execute it without any revisions, in particular revisions that would produce a higher deficit. The trends in the months behind us support that," Dalic said.
Zagreb targets a budget shortfall of 5.1 percent of gross domestic product this year. Analysts forecast a deficit of 5.9 percent of GDP. (
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Dalic said Croatia had met all of its overseas borrowing needs for 2011 and planned one more domestic bill tender this month to roll over a maturing debt tranche worth 300 million euros.
Asked if she would like to continue as finance minister if HDZ wins an election due on Dec. 4, Dalic said: "If HDZ wins the elections, that is sure."