Obligation Centralna Vlada 1.125% ( XS1843434876 ) en EUR

Centralna Vlada

100 % ▲

Croatie

XS1843434876 ( en EUR )

1.125% par an ( paiement annuel )

19/06/2029 - Obligation échue

Prospectus brochure de l'obligation Central Government: Republic of Croatia XS1843434876 en EUR 1.125%, échue

100 000 EUR

1 500 000 000 EUR

Le gouvernement central de la République de Croatie est composé du Parlement (Sabor), du Président et du Gouvernement (Cabinet).

L'obligation croate (XS1843434876) émise par le gouvernement central de la République de Croatie, d'une valeur nominale totale de 1 500 000 000 EUR, avec un coupon de 1,125%, a atteint sa maturité le 19 juin 2029 et a été intégralement remboursée à son prix nominal de 100%, avec une fréquence de paiement des coupons annuelle et un montant minimal d'achat de 100 000 EUR.

REPUBLIC OF CROATIA
1,500,000,000 1.125 per cent. Notes due 2029
Issue price: 98.148 per cent.

The issue price of the 1,500,000,000 1.125 per cent. Fixed Rate Notes due 2029 (the "Notes") issued by the Republic of Croatia (the "Issuer",
the "Republic" or "Croatia"), will be 98.148 per cent. of their principal amount. The Notes will mature on 19 June 2029 at their principal
amount.
The Notes will be in registered form in denominations of 100,000 and integral multiples of 1,000 in excess thereof. Interest on the Notes
will accrue at the rate of 1.125 per cent. per annum from and including 19 June 2019 and will be payable in Euro annually in arrear on 19 June
in each year, commencing on 19 June 2020. Payments on the Notes will be made without withholding or deduction for or on account of taxes
imposed by the Issuer except to the extent described under "Terms and Conditions of the Notes -- Taxation".
This Offering Circular neither constitutes a prospectus pursuant to Part II of the Luxembourg law on prospectuses for securities (loi relative
aux prospectus pour valeurs mobiliéres) dated 10 July 2005 (the "Luxembourg Act") which implements Directive 2003/71/EC (as amended or
superseded), and includes any relevant implementing measure in a relevant Member State of the European Economic Area (the "Prospectus
Directive") nor a simplified prospectus pursuant to Part III of the Luxembourg Act. Accordingly, this Offering Circular does not purport to
meet the format and the disclosure requirements of the Prospectus Directive and Commission Regulation (EC) No. 809/2004 implementing the
Prospectus Directive, and it has not been, and will not be, submitted for approval to any competent authority within the meaning of the
Prospectus Directive and in particular the Supervisory Commission of the Financial Sector (Commission de Surveillance du Secteur Financier),
in its capacity as competent authority under the Luxembourg Act.
The Issuer is rated Ba2 (positive outlook) by Moody's Investors Service, Inc. ("Moody's"), BBB- (stable outlook) by S&P Global Ratings
Europe Ltd. ("S&P"), and the Issuer has a long term foreign currency issuer default rating of BBB- (positive outlook) by Fitch Ratings Ltd.
("Fitch"). The Notes will be rated Ba2 by Moody's, BBB- by S&P, and BBB- by Fitch. A rating is not a recommendation to buy, sell or hold
securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. As at the date of this
Offering Circular, S&P and Fitch are established in the European Union and is registered under Regulation (EU) No 1060/2009 (as amended)
(the "CRA Regulation"). Moody's is not established in the EEA but the rating it has given to the Notes is endorsed by Moody's Investors
Service, Ltd, which is established in the EEA and registered under the CRA Regulation. As such, each of the rating agencies is included in the
list of credit rating agencies published by the European Securities and Markets Authority ("ESMA") on its website in accordance with such
Regulation. In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory
purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such
registration has not been withdrawn or suspended), subject to transitional provisions that apply in certain circumstances whilst the registration
application is pending. Such general restriction will also apply in the case of credit ratings issued by non EU credit rating agencies, unless the
relevant credit ratings are endorsed by an EU registered credit rating agency or the relevant non EU rating agency is certified in accordance
with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). The list of
registered and certified rating agencies published by ESMA on its website in accordance with the CRA Regulation is not conclusive evidence
of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken
against a relevant rating agency and the publication of the updated ESMA list. Certain information with respect to the credit rating agencies
and ratings is set out in the sections entitled "There can be no assurance that Croatia's credit ratings will not change" and "Credit Ratings may
not reflect all risks" of this Offering Circular.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any
state securities law, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
MIFID II product governance / Professional investors and eligible counterparties only target market Solely for the purposes of each
manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target
market for the Notes is eligible counterparties and professional clients only, each as defined in Directive 2014/65/EU (as amended, "MiFID
II"); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person
subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturers' target market
assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes
(by either adopting or refining the manufacturer`s target market assessment) and determining appropriate distribution channels.
The Notes will initially be represented by a global certificate (the "Global Certificate"), in registered form, without interest coupons attached
and will be registered in the name of a nominee of a common safekeeper for Clearstream Banking S.A. ("Clearstream, Luxembourg") and
Euroclear Bank SA/NV ("Euroclear"), on or about 19 June 2019 (the "Closing Date"). The Notes will be issued in the New Safekeeping
Structure ("NSS"). This means that the Notes are intended to be registered in the name of a nominee of a common safekeeper for Euroclear and
Clearstream, Luxembourg and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary
policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend
upon satisfaction of the Eurosystem eligibility criteria established by the European Central Bank from time to time.
An investment in the Notes involves certain risks. See "Risk Factors" for a discussion of certain factors that should be considered in
connection with an investment in the Notes.
Joint Lead Managers
CITIGROUP
ERSTE GROUP BANK AG
J.P. MORGAN
17 June 2019

- ii-

THE REPUBLIC OF CROATIA

- iii-

The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the
knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information
contained in this Offering Circular is in accordance with the facts and does not omit anything likely to
affect the import of such information. The Issuer, having made all reasonable enquiries, confirms that this
Offering Circular contains all information with respect to the Issuer and the Notes which is material in the
context of the issue and offering of the Notes, that the information contained in this Offering Circular is
true and accurate in every material respect and is not misleading, that the opinions and intentions
expressed in this Offering Circular are honestly held and that there are no other facts the omission of
which makes misleading any statement herein, whether of fact or opinion.
No person has been authorised in connection with the offering of the Notes to give any information or
make any representation regarding the Issuer or the Notes other than as contained in this Offering
Circular. Any such representation or information should not be relied upon as having been authorised by
the Issuer or any agency thereof or the Joint Lead Managers (as defined under "Subscription and Sale").
Neither the delivery of this Offering Circular nor any sales made in connection with the issue of the Notes
shall, under any circumstances, constitute a representation that there has been no change in the affairs of
the Issuer since the date hereof.
The Joint Lead Managers make no representation or warranty, express or implied, as to the accuracy or
completeness of the information in this Offering Circular. Each person receiving this Offering Circular
acknowledges that such person has not relied on any Joint Lead Manager or any person affiliated with
any Joint Lead Manager in connection with its investigation of the accuracy of such information or its
investment decision. Each person contemplating making an investment in the Notes must make its own
investigation and analysis of the creditworthiness of the Issuer and its own determination of the suitability
of any such investment, with particular reference to its own investment objectives and experience, and any
other factors which may be relevant to it in connection with such investment.
This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer or any
agency thereof or any Joint Lead Manager to subscribe or purchase, any of the Notes. The distribution of
this Offering Circular and the offering of the Notes in certain jurisdictions may be restricted by law.
Persons into whose possession this Offering Circular comes are required by the Joint Lead Managers to
inform themselves about and to observe any such restrictions. For a description of certain further
restrictions on offers and sales of Notes and distribution of this Offering Circular, see "Subscription and
Sale".
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
(i)
have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the
merits and risks of investing in the Notes and the information contained in this Offering Circular
or any applicable supplement;
(ii)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Notes and the impact the Notes will have on its
overall investment portfolio;
(iii)
have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Notes, including where the currency for principal or interest payments is different from the
potential investor's currency;
(iv)
understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant
financial markets; and
(v)
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks.

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In this Offering Circular, all references to "HRK" and "kuna" are to the lawful currency for the time being
of the Issuer, all references to "", "EUR", "euro" and "Euro" are to the currency introduced at the start of
the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the
European Union, all references to "U.S. dollars", "US$" and "U.S.$" are to the lawful currency for the time
being of the United States of America and all references to "CHF" or "Swiss franc" are to Swiss Francs.
Certain amounts which appear in this Offering Circular have been subject to rounding adjustments;
accordingly, figures shown as totals may not be an arithmetic aggregation of the figures which precede
them.
IN CONNECTION WITH THE ISSUE OF THE NOTES, J.P. MORGAN SECURITIES PLC AS
STABILISATION MANAGER (THE "STABILISATION MANAGER") (OR PERSONS
ACTING ON BEHALF OF THE STABILISATION MANAGER) MAY OVER-ALLOT NOTES
OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF
THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL.
HOWEVER, STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION
ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC
DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN,
MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30
DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE
ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT
MUST BE CONDUCTED BY THE STABILISATION MANAGER (OR PERSONS ACTING ON
BEHALF OF THE STABILISATION MANAGER) IN ACCORDANCE WITH ALL
APPLICABLE LAWS AND RULES.

- v-

EXCHANGE RATES
The following table sets forth for the periods indicated, the average monthly rates published by the
Croatian National Bank (Hrvatska narodna banka) (the "HNB"), expressed as kuna per Euro.

2014
2015
2016
2017
2018
2019

(HRK/EUR)
January ..............................................
7.629820
7.679826
7.652777
7.534989
7.440202
7.424741
February ............................................
7.654972
7.709544
7.636668
7.450718
7.434137
7.411951
March ................................................
7.654440
7.648124
7.566498
7.419710
7.436512
7.416254
April ..................................................
7.627459
7.594858
7.494619
7.441166
7.418312
7.426090
May ...................................................
7.593665
7.553892
7.494223
7.433633
7.388816
7.413388
June ...................................................
7.573554
7.565026
7.511915
7.405667
7.376993

July ....................................................
7.599809
7.579293
7.489517
7.405674
7.388817

August ...............................................
7.626000
7.554396
7.477713
7.398765
7.412997

September .........................................
7.618519
7.574467
7.490070
7.450196
7.422715

October ..............................................
7.650459
7.622835
7.502932
7.501332
7.418863

November .........................................
7.663895
7.598376
7.513263
7.544639
7.425220

December ..........................................
7.667075
7.634682
7.534257
7.543915
7.401281

Yearly average ................................
7.630014
7.609601
7.529383
7.460100
7.414111

______________________
Source: HNB
Croatia has a managed floating exchange rate regime, where the exchange rate of the kuna is not fixed
against another foreign currency or a basket of currencies but is, rather, freely determined by the foreign
exchange market. The exchange rate therefore floats depending on the foreign exchange supply and demand
on the foreign exchange market. The HNB does not predetermine the floor or the ceiling level of the
exchange rate that it attempts to maintain or the level at which it will necessarily intervene. However, the
HNB attempts to prevent excessive exchange rate volatility by occasional market interventions or by other
monetary policy instruments that influence the foreign exchange market or money market conditions such
as open market operations and reserve requirements, among others. The HNB aims to maintain the stability
of the EUR/HRK exchange rate in order to meet its primary objective of maintaining price stability in
Croatia. In particular, in economies where the role and circulation of the euro are substantial and that have
significant capital inflows such as Croatia's, prices are very sensitive to exchange rate fluctuations. As a
result, exchange rate movements significantly impact household inflationary expectations. The effect of this
is augmented by the population's sensitivity to inflation as a result of hyperinflation episodes in the former
Yugoslavia and in the early 1990s.
In 2015, the nominal EUR/HRK exchange rate appreciated mildly. The daily kuna/euro exchange rate
moved within a rather narrow range from 1.1 per cent. to 1.5 per cent. around an average annual exchange
rate of HRK 7.61 to EUR 1, appreciating by 0.3 per cent. from 2014. At the beginning of 2015, depreciation
pressures appeared on the EUR/HRK exchange rate. This was due to the adjustment of bank currency
positions as a result of the Government's decision to fix the CHF/HRK exchange rate for Swiss franc
indexed loans. In order to prevent further depreciation of the EUR/HRK exchange rate, the HNB intervened
twice on the foreign exchange market during January 2015 and February 2015 by selling EUR 498.9
million worth of foreign currency to banks. Depreciation pressures appeared again during September 2015,
mainly as a result of the adopted amendments to the Consumer Credit Act and the Credit Institutions Acts
that enabled conversion of the Swiss franc indexed loans to euro loans. The HNB intervened on the foreign
exchange market to prevent further depreciation of the EUR/HRK exchange rate at the end of September
2015, by selling EUR 268.3 million worth of foreign currency to banks. The daily kuna/euro exchange rate
was stable during the last quarter of 2015. At the end of December 2015, it stood at HRK 7.64 to EUR 1, an
appreciation of only 0.3 per cent. from the end of 2014.
In 2015, the HNB intervened three times on the foreign exchange market by selling a total amount of EUR
767.2 million worth of foreign currency to banks. When transactions with the European Commission and
the central Government are included (net foreign purchase of EUR 935.1 million), total foreign exchange
transactions of the HNB resulted in a net foreign exchange purchase in the amount of EUR 167.9 million
and the creation of HRK 1.2 billion.
In 2016, appreciation of the nominal EUR/HRK exchange rate continued. The daily kuna/euro exchange
rate moved within a range from 0.9 per cent. to 1.8 per cent. around an average annual exchange rate of
HRK 7.53 to EUR 1, appreciating by 1.1 per cent. from 2015. This was mostly attributable to the
continuation of the surplus in the current account of the balance of payments, stronger inflows of EU

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funds, increase in demand for kuna denominated loans (mostly from households) and a slowdown in credit
institutions' deleveraging.
The HNB intervened on the foreign exchange market several times in 2016 to prevent stronger appreciation of
the EUR/HRK exchange rate by buying a total amount of EUR 1,018.8 mil ion worth of foreign currency from
banks. It purchased EUR 83.5 million in May 2016, EUR 69.0 mil ion in September 2016 and EUR 866.3
million in December 2016 (EUR 716.3 million in two foreign exchange auctions and EUR 150.0 million out
of auction).
Total foreign exchange transactions of the HNB in 2016 resulted in a net foreign exchange purchase in the
amount of EUR 866.6 million (creating HRK 6.5 billion of reserve money). The HNB purchased EUR
1,018.8 million from banks and EUR 125.6 million from the central Government and sold EUR 277.8
million to the European Commission.
During the first eight months of 2017, appreciation of the nominal EUR/HRK exchange rate continued.
This trend reversed in September when the nominal EUR/HRK exchange rate started to depreciate. By the
end of 2017 it returned to a level similar to the one observed at the beginning of the year. The daily
kuna/euro exchange rate moved within a range from 1.0 per cent. to 1.5 per cent. around an average
exchange rate of HRK 7.46 to EUR 1. By 31 December 2017, the EUR/HRK exchange rate appreciated by
0.6 per cent., from HRK 7.56 to EUR 1 at the end of 2016 to HRK 7.51 to EUR 1.
The HNB intervened in the foreign exchange market several times in 2017 to alleviate appreciation
pressures on the EUR/HRK exchange rate by buying a total amount of EUR 1,757.0 million worth of
foreign currency from banks. It purchased EUR 424.0 million in June 2017 (EUR 374.0 million in two
foreign exchange auctions and EUR 50.0 million out of auction), EUR 101.5 million in July 2017, EUR
126.0 million in August 2017, EUR 120.0 million out of auction in September 2017, EUR 80.0 million out
of auction in October, EUR 40.0 million out of auction in November 2017 and EUR 765.5 million in
December 2017 (EUR 345.5 million in a foreign exchange auction and EUR 420.0 million out of auction.
Data for 2017 also includes a direct purchase of foreign exchange from banks outside auctions of EUR
100.0 million on 29 December 2016, as the value date of that transaction was 2 January 2017.
Total foreign exchange transactions of the HNB during 2017 resulted in a net foreign exchange purchase
of EUR 1,787.6 million (creating HRK 13.4 billion of reserve money). The HNB purchased EUR 1,757.0
million from banks and EUR 30.6 million from the central Government. There were no transactions done
with the European Commission.
In 2018, appreciation of the nominal EUR/HRK exchange rate continued. The nominal daily kuna/euro
exchange rate moved within a rather narrow range from 0.6 per cent. to 1.3 per cent. with an average
annual exchange rate of around HRK 7.41 to EUR 1, appreciating by 0.6 per cent. from 2017. In 2018,
HNB intervened on the foreign exchange market by buying a total amount of EUR 1,808.9 million worth
of foreign currency from banks and EUR 30.4 million worth of foreign currency from the central
Government (creating HRK 13.6 billion of reserve money). There were no transactions done with the
European Commission.
During the first four months of 2019, the nominal EUR/HRK exchange rate appreciated mildly, from HRK
7.42 to EUR 1 at the end of 2018 to HRK 7.41 to EUR 1 at the end of April 2019. At the beginning of
February, somewhat stronger appreciation pressures appeared so the HNB intervened in the foreign
exchange market by buying a total amount of EUR 450.3 million worth of foreign currency from banks.
During the first four months of 2019, the HNB also sold EUR 452.0 million worth of foreign currency to
central Government. There were no transactions done with the European Commission.

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The following table sets forth the period end, average, high and low official mid-point rates, expressed as
kuna per U.S. dollar:

Period End
Average(1)
High
Low
2014 ................................................................................
6.302107
5.749322
6.302107
5.44043
2015 ................................................................................
6.991801
6.862262
7.258268
6.299529
2016 ................................................................................
7.168536
6.803718
7.247732
6.479354
2017 ................................................................................
6.269733
6.622397
7.260492
6.154188
2018
6.469192
6.278406
6.604879
5.948045
January 2019 ...................................................................
6.496932
6.503106
6.556329
6.439358
February 2019 .................................................................
6.517828
6.527974
6.569177
6.467111
March 2019 .....................................................................
6.610040
6.554411
6.614007
6.503872
April 2019 .......................................................................
6.641671
6.606620
6.663806
6.568564
______________________
Source: HNB
Note: Calculations based on mid exchange rate.
(1) Average of daily rates.
The kuna depreciated significantly against the U.S. dollar in 2014, mainly reflecting movements in the
global foreign exchange markets during the second half of the year, due to the strengthening of the U.S.
dollar against the euro. The U.S.$/HRK exchange rate depreciated by 13.6 per cent. in 2014, from
U.S.$/HRK 5.55 at the end of 2013 to U.S.$/HRK 6.30 at the end of 2014. In 2015, depreciation of the
kuna against the U.S. dollar continued, mainly as a result of the strengthening of the U.S. dollar against the
euro on the global foreign exchange markets. At 31 December 2015, the exchange rate stood at
U.S.$/HRK 6.99, depreciating by 10.9 per cent. from the end of 2014. Depreciation of the kuna against the
U.S. dollar continued in 2016, reflecting the strengthening of the U.S. dollar against the euro on the global
foreign exchange markets. In such an environment, the U.S.$/HRK exchange rate depreciated by 2.5 per
cent. in 2016 and stood at U.S.$/HRK 6.99 at the end of 2015 to U.S.$/HRK 7.17 at the end of 2016.
In 2017, the kuna appreciated significantly against the U.S. dollar, mainly reflecting movements in the
global foreign exchange markets, due to the weakening of the U.S. dollar against the euro. By 31
December 2017, the U.S.$/HRK exchange rate appreciated by 12.5 per cent., from U.S.$/HRK 7.17 at the
end of 2016 to U.S.$/HRK 6.27 at the end of 2017. In 2018, the U.S.$/HRK exchange rate depreciated by
3.2 per cent., from U.S.$/HRK 6.27 at the end of 2017 to U.S.$/HRK 6.47 at the end of 2018. During the
first four months of 2019, depreciation of the kuna against the U.S. dollar continued, as a result of the
strengthening of the U.S. dollar against the euro on the global foreign exchange markets. At 30 April 2019,
the exchange rate stood at U.S.$/HRK 6.64, depreciating by 2.7 per cent compared to the level observed at
the end of 2018.
After unfavourable trends in 2013, the indicators of Croatian export price competitiveness improved again in
2014. The average real effective kuna exchange rate deflated by producer prices continued to depreciate at a
broadly similar pace compared to the previous year. In 2015, depreciation continued at its fastest pace since
2010 (by 3.8 per cent.), mostly due to the nominal effective depreciation of the kuna. In contrast, after
appreciating during 2013, the average real effective kuna exchange rate deflated by consumer prices
depreciated in 2014. This mainly reflected price developments in Croatia relative to Croatia's main trading
partners, thus returning to its 2012 level. In 2015, a combination of the kuna nominal effective depreciation
and favourable price developments in Croatia relative to its main trading partners contributed to further
depreciation of the real effective kuna exchange rate deflated by consumer prices (by 4.3 per cent.). Overall,
the indicators of Croatian export price competitiveness reveal mixed developments in 2016. The average real
effective kuna exchange rate deflated by producer prices was broadly stable during 2016, with more
favourable domestic price developments (relative to main trading partners) offsetting nominal effective
appreciation of the kuna. In contrast, the average real effective kuna exchange rate deflated by consumer
prices, appreciated mildly. Both indicators of Croatian export price competitiveness deteriorated slightly
during 2017. This was due to the appreciation of the kuna's nominal effective exchange rate, which was only
partly alleviated by the relatively favourable domestic price trends. In 2018, the real effective exchange rates
of the kuna deflated by consumer and producer prices depreciated slightly, due to the appreciation of the
kuna's nominal effective exchange rate, which was only partly alleviated by the relatively favourable domestic
price trends.In the years before the crisis, the kuna real effective exchange rate indices deflated by unit
labour costs in the whole economy and in industry were signalling deterioration of cost competitiveness
due to the nominal effective appreciation of the kuna as well as due to faster growth of unit labour costs in
Croatia than in its main trading partners. These negative trends reversed in 2009, 2010, 2011 and 2012
when kuna real effective exchange rate indices, deflated by unit labour costs, depreciated. The real
effective kuna exchange rate, deflated by unit labour costs, in the whole economy continued to depreciate
in 2013 and 2014 but at a much slower pace compared to 2012. In 2015, the real effective kuna exchange
rate deflated by unit labour costs in the whole economy and in industry depreciated further, with the

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former depreciating even faster than the year before. In 2016, depreciation of the real effective kuna
exchange rate, deflated by unit labour costs, continued, both in the whole economy and in industry,
although at a slower pace. In 2017, depreciation of the real effective kuna exchange rate deflated by unit
labour costs in the whole economy continued, at a similar pace. At the same time, the real effective kuna
exchange rate deflated by unit labour costs in industry appreciated slightly, due to the nominal effective
exchange rate appreciation of the kuna, which was only partly mitigated by relatively favourable domestic
costs trends. In 2018, the real effective kuna exchange rate, deflated by unit labour costs in the whole
economy, was broadly stable, with more favourable domestic cost developments (relative to main trading
partners) offsetting nominal effective appreciation of the kuna. At the same time, the real effective kuna
exchange rate deflated by unit labour costs in industry appreciated, due to the nominal effective exchange
rate appreciation of the kuna and relatively unfavourable domestic costs trends.

- ix-

CONTENTS
Page

THE REPUBLIC OF CROATIA ................................................................................................... iii
RISK FACTORS ............................................................................................................................. 1
TERMS AND CONDITIONS OF THE NOTES .............................. ........................................... 11
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM.. 30
USE OF PROCEEDS .................................................................................................................... 33
OVERVIEW OF THE REPUBLIC OF CROATIA ...................................................................... 34
THE ECONOMY . ................................................ ....................................................................... 39
FOREIGN TRADE AND INTERNATIONAL BALANCE OF PAYMENTS . .......................... 60
MONETARY DEVELOPMENTS, INTERNATIONAL RESERVES AND FINANCIAL
SYSTEM ........................................................................................................................ .............. 75
PUBLIC FINANCE..................................................................................................................... 100
PUBLIC DEBT .................................................... ...................................................................... 121
TAXATION ...................................................................................................................... ......... 130
SUBSCRIPTION AND SALE .................................................................................................... 131
GENERAL INFORMATION . ........................................ .......................................................... 133

RISK FACTORS
Investment in the Notes involves a high degree of risk. Prospective investors should carefully consider the
following risk factors, together with the other information set out in this Offering Circular, before making
a decision to invest in the Notes and should understand that the risks set forth below could, individually or
in the aggregate, have a material adverse effect on Croatia's capacity to repay principal and make
payments of interest on the Notes or otherwise fulfil its obligations under the Notes. Most of these factors
are contingencies which may or may not occur and Croatia is not in a position to express a view on the
likelihood of any such contingency occurring. Additional risks and uncertainties not currently known to
Croatia or that Croatia currently deems to be immaterial may also materially affect Croatia's economy and
its ability to fulfil its obligations under the Notes. In any such case, investors may lose all or part of their
investment in the Notes. Words and expressions defined in "Terms and Conditions of the Notes" or
elsewhere in this Offering Circular have the same meanings in this section.
Risk Factors Relating to Croatia
Having acceded to the European Union ("EU") on the back of a raft of legal, economic, financial and
other reforms and policies, Croatia is undergoing a period of transition which may adversely affect the
Croatian economy and Croatia's ability to repay principal and make payments of interest on the Notes
On 1 July 2013, Croatia joined the EU and became its 28th member state. To facilitate this, the
Government of Croatia (the "Government") introduced structural measures in 2012 and 2013 with the
aim of strengthening the quality of public finances and bringing political, economic and judicial structures
in line with EU requirements.
Croatia has also undergone and continues to undergo changes in legislation due to its EU accession. As a
result, there is a lack of an established practice under many securities, tax and other regulatory regimes in
Croatia and new regulations may be subject to contradictory, ambiguous or changing interpretations by the
Croatian regulatory authorities. Consequently, companies operating in the region may face tax, securities
and other regulatory compliance related risks that may be less predictable than in countries with more
stable regulatory systems.
As a result of EU membership, Croatia may be eligible to receive financial assistance from EU structural
funds pursuant to the EU Cohesion Policy. However, there is no guarantee that Croatia will meet the
criteria to receive disbursements under these funds or that such funds would be available or the timing of
any such disbursements (see "The Economy -- Economic Policy -- EU Structural Funds").
Following accession to the EU, Croatia's economy is exposed to increased competition with other EU
Member States (a "Member State"). As part of its EU accession, Croatia also exited from the Central
European Free Trade Agreement ("CEFTA") - a trade agreement between the non-EU countries in
Southeast Europe, which previously accounted for a significant portion of Croatia's exports, particularly in
the agriculture and food industries. Croatia's trade with its non-EU trade partners now relies on each
country's respective Stabilisation and Association Agreement ("SSA"), which is each such country's
bilateral trade agreement with the EU. Following accession to the EU, Croatia's trade with CEFTA
countries declined, specifically in agro-food exports. In addition, as a result of EU accession Croatia is
also required to significantly reduce the level of domestic subsidies to the agriculture sector (see "The
Economy -- Government Subsidies").
Croatia will be eligible to adopt the euro once it fulfils the necessary conditions, and will seek to enter the
Exchange Rate Mechanism ("ERM II"), although the timing for completion of this process remains
uncertain and is unlikely to be in the short term. Under ERM II, the exchange rate of a non-euro area
Member State is fixed against the euro and is only allowed to fluctuate within set limits. Entry into ERM II
is based on an agreement between the ministers and central bank governors of the non-euro area Member
State and the euro area Member States, and the European Central Bank (the "ECB"). Entry into ERM II will
be a step towards the full adoption of the euro in Croatia, in line with Croatia's commitment pursuant to the
treaty for Croatia's accession into the EU (the "Accession Treaty"). On 27 May 2019, the Republic of
Croatia submitted a request to the ECB for the establishment of a close cooperation between the ECB and
the Croatian National Bank in the exercise of supervisory tasks over credit institutions within the Single
Supervisory Mechanism (SSM). This step is part of the procedure for the entry of the Republic of Croatia to
ERM II and, subsequently, to the euro area. The Republic of Croatia intends to concurrently enter into a

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