Two of the bonds will be issued on the domestic market -- one in the amount of HRK 1.5 billion at a fixed interest rate of 6.75 per cent and the other in the kuna equivalent of EUR 650 million at an interest rate of 6.5 per cent. The date of the settlement is July 15, 2010 and the date of maturity is March 5, 2020.

Ten-year Euro-bonds in the amount of $1.25 billion will be issued on the US market at an interest rate of 6.625 per cent. The date of the settlement is July 14, 2010 and the date of maturity is July 14, 2020.

The latest borrowing will be used to finance current budget liabilities and refinance liabilities falling due in the coming period.

Prime Minister Jadranka Kosor and Finance Minister Ivan Suker said that the bond issue, considering the situation on the global financial market, was a recognition to public finance management in Croatia.

"The financial market believes in the policy of this government and in Croatia," Suker said, adding that a lot of countries had tried to issue bonds, but failed. He said that the new bond issue would ensure the necessary financial stability to implement reforms.

"Croatia will get financial stability in the next few months, which implies macroeconomic stability. It's up to us to implement reforms that will reverse negative trends affecting economic growth," Suker said, noting that that would affect the expenditure side of the budget and reduce the deficit.

Suker said that the government planned to borrow HRK 28.8 billion this year, of which HRK 20.2 billion would be used to refinance mature liabilities and HRK 8.6 billion to finance the current deficit.

Kosor said that next week the government would propose a new model of state property management.