Wednesday 18 October 2017

Croatia wipes away the debts of its poorest citizens

Croatian Prime Minister Zoran Milanovic
Croatian Prime Minister Zoran Milanovic
Independent.ie Newsdesk

Independent.ie Newsdesk

Croatia has wiped out the debts of 60,000 of its poorest citizens in 'fresh start' scheme.

Today its government passed into law a plan that saw anyone owing up to 35,000 Croatian kuna (€4,544) have their their debts torn up if they are on social welfare or had monthly income of less than 1,250 kuna (€162).

Voted on last month, several banks, utility companies and the Croatian tax office, among others, agreed to walk away from the €273 million owed to them by eligible debtors. As part of the agreement, the government will not refund the companies for their losses.

The scheme is designed to help some of the 317,000 Croatians whose bank accounts have been frozen due to their debts

Only those without property or savings benefit from the deal, which is predicted to free up the bank accounts of 20pc of those Croatians affected.

Although the program is expected to cost up to €27 million, the government said it expects the long-term economic benefit to outweigh the short-term investment.

"We assess that this measure will be applicable to some 60,000 citizens," Deputy Prime Minister Milanka Opacic. "Thus they will be given a chance for a new start without a burden of debt."

Croatia was hit particularly hard last month when Switzerland suddenly abandoned its three-year bid to hold down the value of its currency.

Over 100,000 Croatians  had taken out loans in Swiss francs – nearly three-quarters of which were to buy property – before the their  currency lost nearly 15pc of its relative value overnight.

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