Deputy Prime Minister and Minister of Regional Development and EU Funds Branko Grcic on Monday announced that the government would review planned investment projects particularly with regard to their sources of funding, in response to questions by the press in the wake of Croatia's credit rating being downgraded by Standard and Poor's.
This situation will lead to a revision of interest rates and I hope these won't be too drastic, Grcic said.
I don't expect a drastic jump in interest rates but this will determine our further activities toward public investments and we will have to analyse each individual project, he said.
He confirmed an earlier statement by Finance Minister Slavko Linic that the issuance of government bonds was one of the options to secure funding.
This could be interesting to citizens considering the slightly higher interest than in banks but this carries a certain risk factor because if savings are withdrawn and transferred to bonds the banks will raise passive interest rates which will result in higher active interest rates, said Grcic.
Minister Linic earlier today said that the government was considering issuing government bonds on the domestic market as citizens had savings and if they showed interest in them.
The Croatian People's Party (HNS), a junior party in the ruling coalition, issued a press release in the wake of Croatia's credit rating downgrade noting that the government should urgently offer a simple and effective model of support to an ailing economy.
They've given their opinion but they too created the Plan 21 ruling coalition election platform and carry part of the responsibility for the government's actions, Grcic said.
