and eventual surplus over time, as required by the government ’ s medium - term fiscal commitment. on the monetary side, the inflation targeting framework the reserve bank has been following for a decade and a half will guide adjustments to interest rates. these will be timely and ahead of a build - up of imbalances that would occur if interest rates were kept low for too long. these frameworks will, in other words, prompt the needed adjustments. it was the preparedness to make those adjustments in the past, guided by these very frameworks, that contained the build - up of imbalances in the upswing and which in turn earned us the scope to take bold measures to support demand when a recession loomed. a continuation of that approach into the future will serve us well.

two - year reference period the bulgarian lev did not exhibit any deviation from its central rate due to its currency board arrangement, while the croatian kuna displayed a low degree of volatility and traded close to its central rate. third, all countries, with the exception of croatia, need to adjust their legal framework to comply with the requirements under union law. they must address issues relating to central bank independence and the prohibition on monetary financing. moreover, let me reiterate what i said here in 2020 when i presented our previous ecb convergence report. in the interest of the euro area as a whole and of each euro area accession country, convergence has to be reached on a lasting basis, and not just at a given point in time. this requires ongoing attention, also through our economic governance mechanisms and sound financial sector supervision. in order to achieve a high level of sustainable convergence, our convergence report emphasises the need for lasting policy adjustments in many of the countries under review. specifically, we emphasise that the next generation eu ( ngeu ) package represents a unique opportunity to accelerate the process of euro area convergence, with swift and effective implementation being crucial for its success. the state of economic and legal convergence in croatia let me now focus on croatia, which is the only country that fulfils all economic and legal requirements for adopting the euro and has expressed the wish to do so on 1 january 2023. with regard to price stability, the 12 - month average rate of hicp inflation in croatia was 4. 7 %, which is below the reference value of 4. 9 %. in terms of fiscal sustainability, croatia ’ s general government budget balance was just below the 3 % deficit reference value in 2021, while its debt ratio was above the 60 % reference value but on a downward trajectory. since the inclusion of the croatian kuna in erm ii, its deviations from the agreed central rate have been significantly smaller than the standard fluctuation band of erm ii. long - term interest rates stood at 0. 8 % on average and thus remained below the 2. 6 % reference value for the interest rate convergence criterion. from a legal perspective, croatian law is compatible with the treaties and the statute of the european system of central banks and of the european central bank. what is key is the amendment to the law on croatia ’ s central bank, which prohibits the croatian government from seeking to influence the members of its decision - making bodies. with the entry into force of the close cooperation