Croatia seeking membership in the European Stability Mechanism

The government adopted a decision to accept a letter expressing interest in submitting a request for Croatia's membership of the European Stability Mechanism (ESM), which Croatia should join in Q1 next year.

The ESM is an intergovernmental organisation established by the euro area member states in 2012. Its mission is to enable the countries of the euro area to avoid and overcome financial crises and to maintain long-term financial stability and prosperity.

The ESM provides loans and other types of financial assistance to member states in difficult financial situations.

ESM shareholders are exclusively countries of the euro area. Croatia will join the euro area on 1 January, 2023, and it is expected it will join the ESM in Q1 2023.

Finance Minister Marko Primorac said after a government session that the ESM had a total capital of nearly €705 billion, which consists of more than €80 billion of paid-in capital ensured by ESM members and nearly €624 billion of callable capital.

Every member contributes to ESM capital based on its share in the total EU population and GDP. Since Croatia's GDP per capita is below 75% of the EU average, we will have the possibility of a temporary correction of the capital contribution key for a period of 12 years, until 2035, said the minister.

The ESM provides us with additional insurance in case of financial crises, inability to access the capital markets, or financial difficulties, so that is a long-term benefit and has a positive effect on our credit rating, Primorac said.