January the 26th, 2023 - The Croatian State Inspectorate has been busy over the last couple of weeks after many stores and services/goods providers unjustifiably raised their prices following the introduction of the euro as the country's official currency. Their findings have been astonishing, and many fines have been issued.

Poslovni Dnevnik brings us the findings of the Croatian State Inspectorate without any changes, and we've translated it into English:

Following the conclusion of the government on the implementation of the principle of the prohibition of unjustified price increases, the Croatian State Inspectorate is continuing to carry out increased inspections aimed at protecting consumer rights.

From January the 5th, 2023, when the Croatian Government adopted the aforementioned conclusion, until yesterday (January the 25th, 2023), the market and tourism inspection of the Croatian State Inspectorate carried out a total of 1,458 inspections, in which, (more specifically in 305 such inspection so far) unjustified price increases after December the 31st, 2022 were determined. In an additional 211 inspections which have been carried out, the process of the determination of any unjustified price hikes is now being determined.

Excluding inspections in which fact-finding remains an ongoing process, unjustified price increases after December the 31st, 2022 were found in 24.5% of inspections. 70% of the supervised entities where a price increase was determined during the inspection, i.e. immediately before the end of the inspection, returned their retail prices to the amounts they were at back on December the 31st, 2022.

"These figures clearly show us that the inspections being carried out by the Croatian State Inspectorate and the measures adopted by the government in order to protect consumer rights have borne fruit," said Andrija Mikulic, Chief State Inspector, when commenting on the progress and preliminary results of the inspections so far.

Out of the total number of inspections performed (1,458), 382 inspections were performed on service providers, 328 inspections were carried out in retail trade, 108 inspections were carried out across the sector of retail bakery products, and 640 inspections were carried out in the catering and hospitality industry.

According to the preliminary data we have access to at this moment in time, the average price increase for supervised services has shot up to a staggering 30%, while the price increase in retail bakery products is, on average, a less but still wholly unwelcome 15%.

A comparative analysis of the "new", higher prices of certain catering and hospitality services and the "old", lower prices found an increase in the prices of certain catering services of up to 10%, and exceptionally in some inspections which have been concluded over this past week, an increase in the prices of certain catering services up to a disgusting 29%.

Regarding prices in retail trade, an average unjustified increase of up to 17% for certain controlled products after December the 31st, 2022, has been observed. For example, unjustified increases in the prices of milk, chicken meat, and beer, were all determined.

It's important to emphasise that a significant number of inspections carried out in retail trade in retail chains have also been completed. In nineteen retail chains, the market inspection carried out 93 inspections. The inspections were carried out ex officio, as planned inspections and on the basis of peoples' reports.

So far, at four retail chains, an unjustified increase in retail prices for ten products has been determined; cat food (29.18%), 800g cocoa drinks (18.91 %), cured meat product sirloins (20.52%), pickles (9%), dog food (38%), cooking chocolate ( 13%), liquid yogurt (24.47%), butter (19.87%) and biscuits (41.24 %). Please note that fact-finding is still underway in several retail chains.

Fines are being imposed on all business entities that unjustifiably increased their prices after December the 31st, 2022, that is, from January the 1st, 2023 until the day of the inspection. As of January the 25th, 2023, a total of 272 fines were issued as part of the completed inspections, in the total amount of 457,357.96 euros (3,445,963.55 kuna).

Inspections being carried out by the Croatian State Inspectorate are set to continue, with each inspection being part of its jurisdiction. This state body will continue to carry out coordinated and continuous inspections with the aim of consumer protection firmly in mind.

For more, check out our news section.

December the 31st, 2022 - Croatian hospitality establishments, particularly bars, restaurants and cafes have been airing the last minute concerns as we are set to introduce the euro as Croatia's official new currency tomorrow. Will they all end up being more or less exchange offices for the next two weeks or so?

As Poslovni Dnevnik writes, will Croatian hospitality establishments double up as unwilling exchange offices during the first half of January? Who will have enough euro coins and cents and who won't? How will cash registers be closed on New Year's Eve? These are all questions currently troubling Croatian hospitality establishments, as with store closures, they'll be the first port of all for all euro transition confusion.

Cash problems

Dalibor Kratohvil, the president of the Croatian Chamber of Trades and Crafts (HOK), said that the state was asked, considering that on New Year's Eve there will be a lot of pressure on Croatian hospitality establishments, to continue making it possible to return the difference when giving people change in kuna.

"The Ministry answered saying that it is clearly written in the Euro Act, in Article 40, Paragraph 2, which says that in the first two weeks of January, in exceptional cases, they can return kuna, if there are no euros available to them at that moment in time,'' said Kratohvil, noting that this is only in exceptional cases such as a shortage of cash in euros.

When speaking about the concrete adaptation of the hospitality sector to the introduction of the euro, Hrvoje Margan, vice-president of the Catering Guild at the Croatian Chamber of Trades and Crafts, said that as far as the technical part is concerned, anyone who is a little more serious about things is ready for it and can do it.

"I think we're all somewhat ready and have a vision of how we'll work, and the biggest problem was that, in order to take some kind of advance supply of money, you had to have enough money in the bank account, and it's not like we're sitting on millions," he stated.

Closing the cash register

He added that IT experts did a good job and prepared the software for the transition to the euro. Thus, if and when a guest pays in kuna, the difference that they must return will be automatically converted into euros. Explaining what will happen at midnight from December the 31st (today) to January the 1st, he stated that, in order to be able to start anew on January the 1st, Croatian hospitality establishments would have to close their cash registers on December the 31st, make a calculation in kuna and then start working again. They'd then have to close all open items until then. The state, he added, came to the rescue and raised the cash limit from 10,000 kuna to 40,000 kuna for this purpose.

Clarifying what could be problematic when the euro comes into force, the vice president of the Catering Guild said that it isn't really a problem if a guest has a bill of 15 euros and pays it with a 200 kuna note, but when someone pays for a coffee of 1.60 euros with a 500 kuna note or more, then issues will arise.

"We're all afraid, not only cafe, restaurant and bar owners, but others as well, of becoming exchange offices," he stated, and when asked what about rounding up of prices and expected price increases, he added that he doesn't expect that to happen because in this situation, when people are looking at every single kuna, there isn't really much room for that.

"I don't know if any of my colleagues touched their prices at all, or if there's been price rounding, I don't expect that there will be any big price increases. Specifically, if we take for example coffee, which is now 12 kuna, it will cost 1.60 euros, or 12.07 kuna, from the New Year onwards, so there won't be a significant difference," he concluded.

For more, check out our dedicated news section.

December the 31st, 2023 - The City of Split has updated its prices in anticipation of the introduction of the euro in Croatia tomorrow, and while public transport may be cheaper, parking isn't...

As Poslovni Dnevnik writes, with the introduction of the euro as this country's official currency, Split's local authorities, or more precisely two of its utility companies, decided to "round up" the prices of some utility services and, as they claim, in such a way as to benefit the end users themselves. Let's make that more simple: city car parks are now more expensive, but public transport is cheaper.

As confirmed to tportal, the prices of Split's car parks will be adjusted to higher amounts with the introduction of the euro, and the winter regime going forward will be similar to what it is currently, one euro in the first zone, while in the summer period, one hour of parking will cost 1.5 euros. A special item on this particular list is the car park on the Riva (promenade) itself, which will be significantly more expensive: from the current 15 kuna (equal to about two euros) for the first hour and 20 kuna for each subsequent hour to slightly more in the winter period (two euros for the first hour, and three euros for the next hour).

However, from the months of May to September, parking on Split's famous Riva will cost 4 euros for the first hour and as much as 5 euros for each subsequent hour.

"However, most of the other prices have actually remained the same: parking in public garages isn't going to increase in price, the price of tenant subscriptions won't change either," they explained to tportal from "Split parking". They then once again announced the intensification of the construction of new public garages in different Split city districts: one has just kicked off as far as construction is concerned, another is due in about three months, and several more are planned throughout the year.

In parallel with the increase in the price of parking, public transport in Split is becoming cheaper: a monthly ticket for the first zone, which until recently cost 290 kuna, will cost the people of Split 30 euros in the future, equal to around 226 kuna. The difference from the actual price, which is set at 35 euros, so about five euros, will be subsidised by the company "Promet" from Split's own city budget.

It is this company that recently implemented a new ticketing system, meaning it's now possible to buy a ticket for the use of Split#s city buses in several different ways - at card machines, through a mobile application, on prepaid cards and the like. They will be slightly cheaper from the current eight kuna, costing around one euro in 2023.

For more, check out our news section.

December the 18th, 2022 - Cafe culture is a big deal in Croatia, from business meetings to concluding contracts to getting together with the neighbours to gossip about other neighbours, it's more or less all done over a (usually) very tiny cup of coffee that one somehow manages to make last for three hours. The sight of kuna and lipa coins left on tables on top of receipts is also common, but how will that sight look following Croatian Eurozone membership?

Croatia is set to scrap the kuna and adopt the bloc's single currency in just two weeks, and there are already issues arising surrounding cash, how to get it, and how to avoid getting stuck with large denominations of euros in cash that you actually can't spend anywhere.

As Poslovni Dnevnik writes, the changing of the national currency is now very much in full swing and many people are already ready to carry out their business operations with the new currency as early as today. However, Dnevnik Nova TV reports that some are worried that there could still be some problems in the first days following the euro's adoption here.

When the first customer wants to come and pay for a coffee in euros in the new year following Croatian Eurozone membership, restaurant owner Franz Letica says he will definitely be ready. He says that he could do business in euros today if it was necessary.

"As far as catering and hospitality in general is concerned, I guess our sector was born ready because we're used to constantly introducing something new and seeing things change at the last minute, so that's normal for us," says Letica.

However, some people are worried about the possibility that in those first days of Croatian Eurozone membership, before there is much money in circulation, customers will come to them trying to pay for items with large denominations of 50 or 100 euros. After they return the rest, they wonder if they will have enough money to return any change to others.

Franz has his own solution for that. He says that it is unacceptable that 100-euro notes should ever be accepted for coffee, and he cites Germany as an example: "You cannot buy bread in a store with a 200 or 500 euro note, you must be prepared and take small change with you."

The Croatian National Bank says that the law does not stipulate whether or not a restaurant or shop or cafe owner or indeed anyone else can refuse an excessively large banknote in exchange for goods or services being sold or rendered. 

For more, check out our news section.

November the 30th, 2022 - Croatian Eurozone accession is drawing ever closer, with the final month in which the kuna will remain the country's official currency beginning tomorrow. You'll be able to purchase Croatian euros tomorrow, but you won't be able to spend them yet.

As Poslovni Dnevnik writes, in order for people to be as ready as possible to use the euro in the first days of 2023, banks, the Financial Agency (Fina) and Croatian post (Hrvatska posta) will make it possible for people to come and purchase a maximum of two initial packages of Croatian euros (coins) per transaction.

The initial package of the new Croatian euros contains 33 euro coins with the Croatian national motifs on them. They will be in all denominations and amount to the value of 13.28 euros. For one initial package of brand new euro coins, you will pay 100 kuna.

People will only be able to use these Croatian euros for legitimate payments in this country and abroad only from January the 1st, 2023. Namely, euro and cent coins with Croatian national symbols on the reverse will only become legal tender in the Republic of Croatia and the rest of the Eurozone on the actual day of Croatia's accession to the Eurozone, which is scheduled for the very first day of 2023.

There are a mixture of feelings among the residents of this country when it comes to sending the now historic Croatian kuna to this history books and replacing it with the single currency of the Eurozone. While some are mourning the loss of a part of Croatia's unique identity in the face of continued EU ''encroachment'', others will be more than happy to no longer be victims of exchange rate fluctuations, and this will be the particular case for those who have taken out bank loans.

For more, make sure to check out our dedicated news section.

June the 4th, 2022 - The German media has claimed Croatian Eurozone accession which will now definitely take place on the 1st of January 2023 is a good thing for tourists and travellers.

As Poslovni Dnevnik writes, the opinion and subsequent decision of the European Commission (EC) that the Republic of Croatia meets all of the conditions for the introduction of the euro is important to the Germans. The tabloid Bild put it on their cover, and many other German media outlets are writing about it.

"Good news for everyone travelling to Croatia," wrote Bild, the headline of which emphasised that there will be no more trouble with the exchange of the euro into Croatian kuna. It is explained that the European Commission, among other things, monitored "inflation and exchange rate stability" and confirmed that Croatia meets the criteria. It also stated that the European Central Bank has concluded the same and quoted the statement of the President of the Commission Ursula von der Leyen, who said that the introduction of the euro will strengthen the Croatian economy, but also that Croatian Eurozone accession will strengthen the euro.

The Frankfurter Allgemeine Zeitung dedicated two articles to Croatian Eurozone accession. One noted that both the European Central Bank and the European Commission have determined that Croatia meets the criteria for the introduction of the euro and that this will be decided by EU finance ministers, according to Deutsche Welle.

Commentary published in the economic part of the FAZ emphasised that the European Commission "knows how to adjust economic data to suit political wishes".

"Such a practice can be seen with the Croatian introduction of the euro on January the 1st, 2023, which is now being recommended by the European Commission. In doing this, it is acting quite arbitrarily with the convergence criteria of the Maastricht Treaty. That tready attests to all non-euro-states (except Romania, which is a special case) that they meet the criteria for state budget stability - with the strange argument that the stability pact has been repealed and that there's nothing they could violate.

In the Croatian case, the treaty also has no interest in the fact that their debt amounts to about 75 percent of GDP, significantly more than the 60 percent prescribed in the Maastricht Treaty. This ignorance has its role models: Italy and Belgium were admitted to the monetary union as founding countries back in 1998, despite their great indebtedness, because they somehow belonged to that circle,'' recalls Frankfurter Allgemeine Zeitung.

The daily for economic issues, Handelsblatt, also emphasised that the ECB and the European Commission have determined that Croatia meets the criteria for the introduction of the euro and that it is set to become the 20th member of the Eurozone next year. It noted that ''all EU member states except Denmark have made a contractual commitment to one day introduce the single European currency, but governments can set the pace themselves. Sweden, for example, still has its own currency. In Eastern Europe, too, some governments are in no hurry to introduce the euro because they appreciate the benefits of an independent monetary policy,'' wrote Handelsblatt.

Numerous other German media (ARD, ZDF, Spiegel, Süddeutsche Zeitung,…) also reported on the green light of the ECB and the European Commission for Croatian Eurozone entry in 2023.

For more, check out our politics section.

September the 23rd, 2021 - Croatian Eurozone accession might still seem like a far away event on the domestic political stage, but it is edging ever closer and things are set to start being quite significantly different as of next summer.

As Poslovni Dnevnik writes, preparations for Croatian Eurozone accession have already started, and one of the measures is to ensure that prices don't increase significantly, which is something most people fear when asked what their worries surrounding the process of phasing out the Croatian kuna is.

Tihomir Mavricek pointed out that this will be among the very first things that will be tackled, and that the fixed exchange rate will be determined just before the decision of the EU Council on the introduction of the euro as Croatia's official currency.

"It will be around 7.53, but it will finally be determined in May or June next year and will become valid from January the 1st, 2023. Until December the 31st, 2022, the commercial exchange rate will be valid, it'll be as we have it now," he explained for HRT.

"There's no need to be afraid of price increases"

Many people are afraid of price increases as a result of Croatian Eurozone accession, but Mavricek has assured that the practice of countries that have already adopted the euro has shown that the replacement of the national currency has had very little effect on price growth, ie inflation.

"The countries that first adopted the euro had a small so-called harmonised growth of the consumer price index, which ranged between 0.09 and 0.28 percentage points. Countries that later adopted the euro had one which stood at around 0.3 - so we don't expect any significant impact on prices, maybe of some 0.37 percentage points, with the biggest impact coming from services and a slightly smaller number of commonly used products, such as pastries and newspapers,'' said Mavricek.

After the introduction of the euro in neighbouring Slovenia, prices in transport, restaurants and hairdressing/beauty salons increased, while in Slovakia the prices of food and construction works increased.

"Research has shown that these increases mostly regard products that don't affect people with lower incomes when compared to those with higher incomes, such as sectors like accommodation services, restaurants, and sports services - these are usually services used by people with higher incomes," explained Mavricek.

For more on Croatian Eurozone accession, check out our dedicated politics section.

ZAGREB, 10 Sept 2021 - The European Commission and euro area Member States on Friday signed a Memorandum of Understanding (MoU) with Croatia outlining the practical steps that will allow the country to begin producing euro coins when it receives the go ahead to join the euro area.

The memorandum, signed in Brdo pri Kranju, Slovenia, regulates issues related to the necessary preparations ahead of and up to the actual minting of euro coins, including the acquisition and production of minting tools and coin test runs.

The MoU was signed by Executive Vice-President Valdis Dombrovskis, European Commissioner for Economy Paolo Gentiloni, President of the Eurogroup Paschal Donohoe and Croatian National Bank Governor Boris Vujčić.

The HNB said in a statement that based on the document Croatia could launch preparations, that is, start making a detailed scenario for transition to the euro, start arrangements for the distribution of euro coins and the withdrawal of the Croatian kuna during the changeover, and the selection of its euro coin national side designs.

It can also start technical preparations for the common side of the euro coins, begin preparing mints for euro coin production and buying and making tools necessary to make coins as well as start with coin test runs and start making euro coins.

The Memorandum enables the continuation of preparations for the production of euro coins with the national side and marks an important step in our plan to make everything ready for the introduction of the euro in 2023, HNB Governor Vujčić was quoted by the HNB as saying, noting that Croatia remained committed to achieving that goal.

The EC, too, reported about the signing of the document, citing Executive Vice-President Dombrovskis as saying that the EC continued to support Croatia in its efforts to join the euro area, from which, he said, it stands to benefit greatly.

"However, before it can adopt Europe's single currency, Croatia must first meet all Maastricht criteria and continue to make progress on technical preparations," he said.

Commissioner Gentiloni welcomed Croatia's commitment to joining the euro area, stressing that it belonged there.

He said that the EC would continue supporting Croatia in its preparations and efforts to meet the convergence criteria.

Croatia is still not a member of the euro area but the kuna has been part of the exchange rate mechanism (ERM II) since 10 July 2020.

The signing of the MoU is one of the normal preparatory steps when a non-euro area Member State intends to join the euro area.

For more on politics, CLICK HERE.

The introduction of the euro as Croatia's official currency, thus replacing the Croatian kuna, has been the subject of much talk and heated debate. While some are completely for the move for practical reasons, others are sad to see the kuna go, seeing the introduction of the euro as a loss of Croatia's precious identity, which was so hard-won.

The debate about Croatia's imminent entry into the formerly highly problematic Eurozone continues to go on, with frightening memories of the Greek crisis still fresh in many a mind. Some are even demanding a referendum on the adoption of the euro, but the truth of the matter is that Croatia had to agree to adopt the euro eventually in order to join the European Union, of which it became a full member back in July 2013. Love it or hate it, it's happening - but when?

Croatia has officially sent its letter of intent to the appropriate bodies, as well as a list of promises to reform many key areas in the country's usually draconian national policies. The country's letter was met with a positive reaciton from the powers that be, and Croatia now has a mere twelve months to implement everything asked of it in order to enter the ERM II, a sort of pre-euro waiting room, in which it will remain for around two years.

As Poslovni Dnevnik writes on the 15th of July, 2019, the aforementioned letter of intent that Croatia sent to Brussels regarding Croatia's planned introduction of the euro was assessed by Finance Minister Maric as one of the most important moments in Croatia's recent history. It is possible, as he himself says, that the euro will become Croatia's official currency at the beginning of 2024, as he said to RTL.

"It's difficult to say which year it will be, but I'd say that [the above mentioned date] is possible. We've taken over the obligations to fulfill some of the [prescribed] measures. We have to do this ourselves to boost economic growth. The year you've mentioned is realistic,'' the minister confirmed.

He also announced what many, especially those working in tourism, have been wanting - a lower VAT rate from January the 1st, 2020.

"We have pledged to continue reducing the parafiscal charges. One of the relief measures is the lowering of the VAT rate as of January the 1st, 2020. We're well on track to find space to give a new ''flywheel'' to employers to be able to pay their employees higher salaries. When it comes to what shape that will take and which way it will be done, we'll have to wait a few more weeks. When we do everything, I will first present it all to the President of the Government, the Croatian Government and the parliamentary majority, and then we will go public with it all,'' the minister stated.

The final decision when it comes to Croatia's entry into the Eurozone lies with the Eurozone's member states, and the European Central Bank.

Make sure to follow our dedicated politics page for much more on the political scene in Croatia, as well as Croatia's pending Eurozone entry.

In conversation with Dnevnik Nova TV, Croatian Finance Minister Zdravko Marić revealed just how much taxpayers in Croatia had to pay out in guarantees for the country's ailing shipbuilding industry and the negative effects of the introduction of the euro as the country's official currency, a move which could happen in five years.

Will citizens and entrepreneurs feel economic growth? For example, will the non-taxable portion of salaries (take home pay) increase?

Entrepreneurs and citizens contribute the most to this economic growth. They create it on the one hand, and when it happens, as a result, we need to strive in the sense of measures, in order to raise the growth rates further.

To increase non-taxable parts of salaries?

It's still early to talk about the details. Salary growth has achieved positive effects. We should continue in that same direction. In terms of how much space there is [to move] on income tax, there's even more [space] in terms of the part of the non-taxable part itself. Remember the measure from December last year. More than 1.2 billion kuna was also paid by employers to their employees.

Is there any room to reduce excise duty on fuel?

You should also look at a comprehensive picture in the segment of indirect taxes. As a rule, there's always something that we have to take into special consideration because of the share of indirect taxes, Croatia is at the very top of the EU. But we should also take that into consideration in a broader context.

When you reduce fuel excise, you know for yourself that the price of everything drops.

Not as a rule always. To the last change in VAT, when we lowered taxes in our history, there's been no price reduction. But in the last couple of months, we've seen lower prices of fruit or meat, while fish and vegetables have even increased.

And in the hospitality industry by 13 percent?

This is the topic we'll also discuss.

Is the end of the issuing of shipbuilding guarantees?

This is unfortunately like in one of those ads when there's something extra at the end. I have to tell Croatian citizens that as of today, 4,420,000,000 kuna has been paid, and in the last couple of days the guarantees for the Jaružela ship, a great ship, have been protested, as well as two additional ones. Only 120.000.000 kuna is left. They're enormous sums of money. You can't be satisfied with the fact that we've paid for the construction of ships that haven't ever even been built as a finance minister or as a taxpayer.

What are the negative effects of the introduction of the euro?

Due to their very good knowledge and their history of experience with hyperinflation, devaluations before the introduction of the kuna, Croatian citizens say that in the first place, they're afraid of price increases. This needs to be taken seriously. It's a topic that doesn't happen overnight. There are several steps to take along that path. All measures must be taken to minimise any dangers and risks. And that all of the positive benefits manifest and come into effect as much as possible.

Make sure to follow our politics page for much more on the political scene in Croatia. 

Click here for the original article from Poslovni Dnevnik