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Saturday 9 December 2023 Dublin: 11°C
leicaroo The Croatian capital of Zagreb
a new start

A European country is wiping out thousands of its citizens' debts. But it's not Greece

The write-off could be worth up to €273 million for 60,000 of the nation’s poorest citizens.

SOME 60,000 of the poorest citizens in Croatia will have their slates wiped clean from today after the government passed a plan to write off their debts.

Under the country’s “fresh start” programme, people owing up to 35,000 Croatian kuna (€4,544) would have their debts torn up if they were on welfare or had monthly income of under 1,250 kuna (€162).

Several banks, utility companies and the Croatian tax office, among others, agreed to the deal which would mean they walked away with nothing from the eligible debtors.

When the plan was voted in last month, it was predicted the move would apply to 60,000 citizens – which put the potential cost of the haircut to creditors at up to 2.1 billion kuna (€273 million).

Only those without property or savings would benefit from the deal, which is predicted to free up bank accounts for 20% of the over 300,000 Croatians whose finances have been frozen because of bad debts.

Prime Minister Zoran Milanovic said it was the first time any Croatian government had tried to solve the “difficult” problem and it was proud of the plan, according to Reuters.

Macedonia Croatia Prime Ministers Boris Grdanoski / AP/Press Association Images Croatian Prime Minister Zoran Milanovic Boris Grdanoski / AP/Press Association Images / AP/Press Association Images

A six-year recession

The nation of 4.2 million, which joined the European Union in 2013, has been in recession for six years and its GDP has shrunk 12% over the period since the financial crisis hit.

Its unemployment hit 17% in late 2013 and the youth jobless rate remains over 40%, one of the highest in Europe behind Greece and Spain.

Unemployment 2 Google / World Bank Comparative unemployment rates - Croatia, Greece, Spain and Portugal Google / World Bank / World Bank

Croatia was also mong the eastern European countries hit hard when Switzerland suddenly abandoned a three-year bid to hold down the value of its currency last month.

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

- With AFP

READ: Greece doesn’t want to talk to the Troika – and is rejecting €7.2 billion in loans >

READ: Irish people easily have the worst mortgage debts in the eurozone >

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