The kuna is the currency of Croatia (ISO 4217 code: HRK). It is subdivided into 100 lipa. The kuna is issued by the Croatian National Bank and the coins are minted by the Croatian Monetary Institute.
The word "kuna" means "marten" in Croatian since it is based on the use of marten pelts as units of value in medieval trading. It has no relation to the various currencies named "koruna" (translated as kruna in Croatian). The word lipa means "linden (lime) tree".
The idea of a kuna currency reappeared in 1939 when the Banovina of Croatia, established within the Yugoslav Monarchy, planned to issue its own money.
In 1941, when the Ustaše formed the Independent State of Croatia, they introduced the Independent State of Croatia kuna. This currency remained in circulation until 1945, when it along with competing issues by the socialist Partisans, disappeared with the establishment of a socialist state.
Coins of Independent State of Croatia (1941-1945)
The modern kuna was introduced on May 30, 1994, starting a transitional period from Croatian dinar, ending on December 31, 1994. The exchange rate between dinar and kuna was 1 kuna = 1000 dinars.
The choice of the name kuna was controversial because the same currency name had been used by the Independent State of Croatia kuna, but this was dismissed as a red herring, since the same name was in also in use during the Banovina of Croatia and by the ZAVNOH. An alternative proposition for the name of the new currency was kruna (crown), divided into 100 banica (viceroy's wife), but this was deemed too similar to the Austro-Hungarian krone and found inappropriate for the country which is a republic. The transition to the new currency went smoothly and the controversy quickly blew over.
The self-proclaimed Serbian entity Republic of Serbian Krajina did not use the kuna or the Croatian dinar. Instead, they issued their own Krajina dinar until the region was integrated back into Croatia in 1995.
The main reference currency for kuna was the German Mark, and later the Euro. A long-time policy of the Croatian National Bank has been to keep the fluctuations of the kuna exchange rate with the euro in a relatively stable range. The country has been on the path of accession to the European Union and it plans to join the European Monetary System.
Croatian kuna banknotes
Privatization and the drive toward a market economy had barely begun under the new Croatian Government when war broke out in 1991. As a result of the war, the economic infrastructure sustained massive damage, particularly the revenue-rich tourism industry. From 1989 to 1993, GDP fell 40.5%. With the end of the war in 1995, tourism and Croatia's economy recovered moderately. However, corruption, cronyism, and a general lack of transparency stymied meaningful economic reform, as well as much-needed foreign investment.
Croatia's economy turned the corner in 2000 as tourism rebounded. The economy expanded in 2002, stimulated by a credit boom led by newly privatized and foreign-capitalized banks, some capital investment, most importantly road construction, further growth in tourism, and gains by small and medium-sized private enterprises.
Croatia has a high-income market economy. International Monetary Fund data shows that Croatian nominal GDP stood at $69.357 billion, or $15,633 per capita, at the same time in 2008 purchasing power parity GDP was $82.407 billion or $18,575 per capita.
According to Eurostat data, Croatian PPS GDP per capita stood at 63.2 percent of the EU average in 2008. Real GDP growth in 2007 was 6.0 per cent. and at the same time average gross salary of a Croatian worker during the first nine months of 2008 was 7,161 kuna (US$ 1,530) per month In 2007, the International Labour Organization-defined unemployment rate stood at 9.1 per cent, after falling steadily from 14.7 percent in 2002. The registered unemployment rate is higher, though, standing at 13.7 percent in December 2008.
In 2009, economic output was dominated by the service sector which accounted for 73,6% percent of GDP, followed by the industrial sector with 20,5% and agriculture accounting for 5,9% of GDP. According to 2004 data, 2.7 percent of the workforce were employed in agriculture, 32.8 percent by industry and 64.5 in services.
The industrial sector is dominated by shipbuilding, food processing, pharmaceuticals, information technology, biochemical and timber industry. Tourism is a notable source of income during the summers, with over 11 million foreign tourists in 2008 generating a revenue of €8 billion. Croatia is ranked as the 18th most popular tourist destination in the world. In 2008 Croatia exported goods to the value of $14.4 billion (FOB) ($26.4 billion including service exports).
The Croatian state still controls a significant part of the economy, with government expenditure accounting for as much as 40% of GDP. Some large, state-owned industries, such as the country's shipyards, continue to rely on government subsidies but with EU membership looming, Croatia is forced to restructure debt ridden shipyards as it is a prerequisites for Croatia before it joins the EU. Subsidies for loss making industries also reduce needed investments in to education and technology needed to ensure the economy's long-term competitiveness.
Of particular concern is the backlogged judiciary system, combined with inefficient public administration, especially issues of land ownership and corruption. Another main problem includes the large and growing national debt which has reached over 34 billion euro or 89.1 per cent of the nations gross domestic product. Because of these problems, studies show that the population of Croatia generally has negative expectations of the country's economic future.
Croatia has so far weathered the global financial crisis reasonably well, but faces significant challenges in 2010 largely due to Croatia's external imbalances and high foreign debt, which in longer term presents problems for Croatian financial sector due to higher cost of borrowing to cover current account deficit.
The country has been preparing for membership in the European Union, its most important trading partner. In February 2005, the Stabilisation and Association Agreement with the EU officially came into force and by the end of 2009 Croatia has closed 17 EU accessions chapters, with remaining 16 to be completed by the end of first half of 2010. Croatia is expected to join the EU sometimes in 2011 or January first 2012 together with Iceland.
The highlight of Croatia's recent infrastructure developments is its rapidly growing motorway network, of which plans were drawn and work commenced in the 1970s, but was realised only after independence because of the (then) Yugoslav Government plans of road projects of 'national' importance. In 1997, at the Third Ministerial Session of the European Conference of Ministers of Transport, routes of four Pan-European corridors were defined running through Croatia, giving extra importance to Croatian road network.
Croatia has now over 1,100 kilometres (680 mi) of completed motorways connecting Zagreb to most other regions. The best known and the busiest motorways are the A1, connecting Zagreb to Split and the A3, passing east–west through northwest Croatia and Slavonia. Toll is charged at most sections of the motorways—the most notable exceptions are Zagreb bypass and Rijeka bypass. There is also a smaller and less known network of expressways connecting to the motorways. The most heavily used ones are the B8, connecting the A7 near Rijeka to the A9 north of Pula, and the D28 spanning from the A4 near Zagreb to Bjelovar. The Croatian motorway network is of very good overall quality and excellent safety, confirmed by several EuroTAP and EuroTest awards.
© HUKA 2008, all rights reserved
Croatian tolls - categories
Croatia has an extensive rail network, although due to historical circumstances, some regions (notably Istria and even more so Dubrovnik) are not accessible by train without passing through neighboring countries. Serious investment is needed in the rail network over the coming decades to bring it up to European standards in both speed and operational efficiency. All rail services are operated by Croatian Railways (Croatian: Hrvatske željeznice). The inter-city bus network (operated by private operators) is extensively developed, with higher levels of coverage and timetables than the railways.
Hrvatske željeznice's train
Croatia has three major international airports, located in Zagreb, Split and Dubrovnik. Other important airports include Zadar, Rijeka (on the island of Krk), Osijek, Bol, Lošinj and Pula. Croatia Airlines is the national airline and flag carrier. The U.S. Federal Aviation Administration (FAA) has assessed the Government of Croatia’s Civil Aviation Authority as not being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Croatia’s air carrier operations.
An extensive system of ferries, operated by Jadrolinija, serves Croatia's many islands and links coastal cities. Ferry services to Italian cities of Venice, Ancona, Pescara and Bari from around a dozen of Croatian sea ports, most notably Rovinj, Rijeka, Zadar, Split, Korčula and Dubrovnik, is available on a daily or weekly basis. From April to September the schedule is more dense and can include several round trips within a day.