Croatian Prime Minister Jadranka Kosor said on Thursday first auctions for loans to be co-financed by the government and for guarantees from a guarantee fund could be expected in mid-February.
"If everything goes as planned, and it has to, the first results can beexpected on February 16," Kosor said at today's government session atwhich the government defined models for the financing of measures designed tohelp economic recovery and development and sent to the parliament a bill on aguarantee fund for economic recovery.
The government co-financing and provision of guarantees is aimed at boostingbanks' credit activity and enabling companies to get loans for liquidity andnew investment, said Kosor.
Finance Minister Ivan Suker said the government wanted to see loan growth,which last year was between 3 and 3.5 percent, to at least double this year.
The government's measures designed to enable economic recovery anddevelopment actually contain two models of active state involvement inproviding credit for the business sector -- financing of business projects anda guarantee fund, designed for businesses facing difficulty due to thefinancial and economic crisis, that is, businesses which got in financialtrouble after July 1, 2008.
This project involves the government, the Croatian National Bank (HNB), andcommercial banks, said Kosor, adding that the HNB would lower the reserverequirement rate by one percent to release three billion kuna for businessbanks.
Of that amount, business banks would give two billion in loans to theCroatian Reconstruction and Development Bank (HBOR), and keep one billion forthemselves.
This model would enable business owners to get loans for working capital inorder to ensure a satisfactory level of liquidity.
With the other model, which envisages the establishment of a guarantee fund,the government wants to take over a part of the loan risk, thus helpingbusinesses get more favourable bank loans.
Guarantees would be granted for loans designed to finance investment andworking capital and to reschedule loans agreed after July 1, 2008. It would bepossible to pay with those loans, in part, the existing due obligations towardsthe state and banks.
The state would participate in the guarantee fund with two billion kuna, andtogether with banks, an additional four million kuna would be made available tobusinesses under this model, Kosor said.
Under the government bill on the guarantee fund, individual guarantees couldamount to a maximum 50 percent of the loan principal.
