Finance Minister Zdravko Maric said on Wednesday that Croatia was meeting its commitments under the European Exchange Rate Mechanism (ERM II) according to plan, adding that this week the government would adopt guidelines on budget limits for the next three years.

“We are not running late. Quite the contrary, we are a bit ahead of schedule,” Maric told reporters after a meeting of the national council for the adoption of the euro, stressing that it was very important for Croatia to meet the convergence criteria.

After entering the Exchange Rate Mechanism (ERM II) in July 2020, Croatia – along with Bulgaria – is required to meet the so-called Maastricht criteria of “nominal convergence” and implement “reforms envisaged by the action plan,” state agency Hina reported.

The Maastricht criteria include exchange rate stability, price stability, interest rate stability, and two important public finance indicators – budget deficit and public debt. Croatia’s action plan includes eight measures covering four key areas which include money laundering prevention, improving the business environment, improving public sector governance, and improving the justice system.

Maric said that later this week the government is expected to adopt budget limits for the next three years, in line with its convergence program.

“We will be in full compliance with the criteria and will meet everything that is expected of us, not just for the sake of adopting the euro but also because we have learned as a country that it is very important to have sustainable public finances,” he said.

“With this year’s budget, the public debt-to-GDP ratio is returning to a downward trajectory and this trend should continue in the next three-year period,” Maric said.

The convergence program is a regular document adopted in dialogue with EU institutions. In April, the government adopted its eighth convergence program, for the 2022-24 period, projecting a GDP growth rate of 5.2 percent in 2021, 6.6 percent in 2022 and 4.1 percent in 2023.

The general government deficit target for this year is 3.8 percent of GDP, while the deficit for 2022 is projected within the Maastricht criteria at 2.6 percent of GDP. It is forecast at 1.9 percent of GDP in 2023 and 1.5 percent in 2024. At the same time, public debt is expected to fall – from 86.6 percent of GDP in 2021 to 82.5 percent in 2022, to 79.5 percent in 2023 and to 76.8 percent of GDP in 2024.

The Maastricht criteria set the maximum allowed government budget deficit at 3 percent, and the government debt-to-GDP ratio at a maximum of 60 percent.

Croatia’s government hopes that the country could replace its currency, the kuna, and join the eurozone by 2023.