The government decided to issue bonds worth 300 million euros in kuna equivalent, with a fixed annual interest rate of 5.5 percent and the payment deadline in 2014.
This will not increase the country's indebtedness or the public debt, Finance Minister Ivan Suker said. He explained that the bonds would be used for the payment of 200 million kuna of government bonds issued in 2001, the payment of the Croatian Health Insurance Agency's 410 million kuna loan from 2003 and the payment of 230 million kuna to the Croatian Highways company. Only 20 to 30 million kuna will be used to cover the budgetary deficit, Suker said.
The minister recalled that this year 18.49 billion kuna worth of loans would be sought for the payment of the principal sum of matured debts and the coverage of the budgetary deficit.
Most of the debt was serviced on the domestic market, in line with an agreement with the Croatian National Bank, and this practice will continue until the end of the year, Suker said, adding that the government had given up on issuing samurai bonds at the end of the year and decided to seek loans on the domestic market instead.
The government has managed to slow down the growth of the foreign debt and that trend should be maintained, Suker said, adding that the foreign debt currently amounted to some 26 billion dollars.
So far this year the government has issued 750 million euros worth of bonds on the domestic market. The government's policy has resulted in a reduction of the weighted interest rate of the entire domestic bond portfolio from 7.23 percent at the end of last year to 5.94 percent, Prime Minister Ivo Sanader said.
The government today also approved granting around 10.4 million kuna from the budget of the Regional Development Fund for infrastructure development projects in eight local self-government units on islands, in the coastal area, and areas of special state interest.