Croatia moved closer to fully adopting the euro on Tuesday after the government adopted historic spending plans.
Zagreb passed its first-ever budget in the common European currency, ahead of its entry into the Eurozone on 1 January 2023.
"The introduction of the euro will strengthen our economy, it will be an anchor of stability, will make us more resistant and protected from external shocks and crises and will contribute to the improvement of investment climate," said Finance Minister Marko Primorac, announcing the spending plans.
The Eurozone is a group of 19 EU member states, primarily in western and southern Europe, alongside the Baltics, which use the euro as their currency. The Republic of Croatia, a small Balkan country on the Adriatic sea, will be its newest member.
This first-of-a-kind budget calculated in euros was adopted with 77 votes in favour and 50 against in Zagreb's 151-seat parliament.
It predicts that Croatia's economy will grow by 0.7% in 2023, with the government chalking up a deficit of 2.3% of gross domestic product (GDP).
A deficit occurs when the government spends more than it receives in tax, while GDP measures the value of goods and services produced within a country.
In July, EU finance ministers formally agreed to admit Croatia as the 20th member of the Eurozone, which was hailed as the culmination of an "amazing journey" for a country once at war.
They set the conversion rate at 1 euro for 7.53450 Croatian kuna.
Croatia has been an EU member since 2013.
Prime Minister Andrej Plenkovic said the budget aims to cushion the effects of the Ukrainian war-triggered economic crisis, maintain growth and preserve social stability.
Economic growth of 5.7% expected this year is forecast to drop to 0.7% in 2023, while public debt is targeted to be cut to 67.9% of GDP from 70.2% this year.
Inflation, which is projected at 10.4% this year, is seen dropping to 5.7% in 2023.
Government revenue is expected to be 24.9 billion euros in the new budget -- up 9% from 2022. This additional money is set to be raised through direct and indirect taxation.
Spending is set at 26.7 billion euros -- a 2.1 billion euros rise from this year -- due to an increase in government social and development programmes.
Opposition lawmakers proposed 430 amendments to the budget but the government accepted only 10.