Croatia on Wednesday became the 20th member of the European Stability Mechanism (ESM), an intergovernmental organisation established by member states of the euro area in 2012 to reinforce efforts aimed at overcoming financial crises, the Croatian Finance Ministry said in a press release.

Croatia became the newest member with the entry into force of the ESM Treaty for that country, ESM said on its web site.

This follows Croatia’s adoption of the euro on 1 January 2023 and the ESM’s approval of Croatia’s application to become a member of the organisation.

“One of the many advantages of joining the euro area is the privilege of membership in the ESM and the benefits that it confers. The ESM adds an important layer of protection and security to the euro area, which now Croatia is also a part of. This will contribute to the stronger resilience of our financial system and the economy, which is a significant and tangible achievement,” Croatian Finance Minister Marko Primorac was quoted as saying on the ESM website.

The ESM membership will enable Croatia to take advantage of benefits stemming from the adoption of the euro as the official currency.

In the event of financial crises, Croatia will be eligible for tapping funds from ESM mechanisms.

ESM shareholders are exclusively euro area member states. It has a total capital of almost €705 billion.

Croatia subscribed to €3.7 billion of the ESM capital stock, with an initial contribution of €422.29 million to the ESM’s paid-in capital, which provides backing for the bonds and bills issued by the ESM. This amount will be paid in five annual tranches. As a country with a GDP per capita of below 75% of the EU average, Croatia benefits from a temporary correction that lowers its paid-in capital contribution by €233 million until 2035.

Croatia’s finance minister sits in the ESM Board of Governors.