The Croatian government will borrow EUR 500 million from domestic banks to repay the credit taken in previous years, the government decided at a session on Thursday.
"This is not an increase in the debt of the Republic of Croatia, but funds for the repayment of the credit from previous years," Finance Minister Ivan Suker said.
The syndicated loan of EUR 500 million will be taken at a variable interest rate in the amount of six-month EURIBOR increased by 4.25 per cent. The loan will be payable in two equal instalments, the first one at the end of March 2013 and the second one at the end of March 2014.
Citing the latest figures from the Croatian National Bank and the Finance Ministry, Suker said that the general government debt, which includes the central government and local government debt and the debt of extrabudgetary funds, amounted to HRK 117.9 billion, or 35.4 per cent of GDP.
By comparison, in EU member states that ratio exceeds 60 per cent, he added.
The latest figures show that Croatia's foreign debt is slightly below EUR 44 billion, with the central government foreign debt accounting for EUR 5.15 billion, or 11.8 per cent of the total foreign debt. The share of foreign direct investments in the overall foreign debt is 16.1 per cent or EUR 7.37 billion, the banks' foreign debt is EUR 9.89 billion, or 22.7 per cent, while the foreign debt of other sectors, including companies and households, is EU 21.52 billion, accounting for 49.4 per cent of the total foreign debt.
"We're not shrinking from the fact that this is the debt of the Republic of Croatia, but the question is whether the economic growth of previous years would have been as it was had there been no foreign investment," Suker said.
Suker said that Croatia's budget deficit was 4 per cent of GDP, compared to an average of over 7 per cent in the EU 27.
