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Croatia Is ‘Far’ From Euro Adoption Because of Budget Gap

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June 13 (Bloomberg) -- Croatia is “far” from adopting the euro because it will “take a while” to narrow its budget deficit to less than the European Union’s limit of 3 percent of gross domestic product, Finance Minister Slavko Linic said.

“Our task in the next four years is to strengthen the economy and undertake reforms of the health and pension systems,” he said at a conference in Zagreb today.

Croatia, which is set to join the 27-nation bloc in July 2013, proposed 4 billion kuna ($700 million) in budget cuts in January to narrow the budget deficit to 3.8 percent of GDP from 5.5 percent in 2011. The government has forecast the economy will grow 0.8 percent this year, while the World Bank predicted a 1 percent decline.

The government will inject 8 billion kuna from reconstruction banks and EU funds into infrastructure to revive investment in energy and tourism, Prime Minister Zoran Milanovic said in January.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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