The bonds will be used to pay the principal sum of loans which fall due this year, as well as to finance a part of the budgetary deficit.
The bonds will be issued at a price of 100 percent of their nominal value, with a fixed annual interest rate of 5.25 percent.
The issue was arranged by Erste&Steiermaerkische Bank, HVB Splitska Banka, Privredna Banka Zagreb, Raiffeisenbank and Zagrebacka Banka.
Finance Minister Ivan Suker said the issue would not encourage foreign borrowing and that the Government's orientation toward the domestic capital market was aimed at slowing down a considerable growth of the foreign debt.
From 1999 to 2004 the share of the foreign debt in GDP rose from 54 percent to 83 percent.
The Government also adopted the 2006-2008 Pre-accession Economic Programme (PEP) to ensure continued and faster economic growth and development and improve the standard of living.
The PEP envisages a slight acceleration of the economic growth of four percent annually in the 2006-2008 period.
Special attention will be paid to privatisation, the restructuring of the shipbuilding industry, railways, the iron and steel industry, and reform of the health system, public administration, etc.
The PEP envisages accelerating privatisation and completing it by the end of 2007.
The Ggovernment believes that the privatisation of the remaining state portfolio, in which most companies are ones losing money, could yield between 750 million and one billion kuna.
(1 EUR = 7.4 kuna)