STATE WILL ISSUE BONDS FOR PAYMENT OF INSURED DEPOSITS

ZAGREB, Nov 3 (Hina) - The State agency for the financial reorganisation of banks and deposit insurance (DAB) will issue government bonds worth 2.5 billion kuna in order to pay all insured deposits in banks and savings banks which have gone bankrupt. A bill authorising the DAB to issue government bonds was adopted on Friday by the Croatian government and sent into urgent parliamentary procedure. The state budget for 2000 envisages transfers to the Agency for the payment of insured deposits worth 445 million kuna. So far, of a total of 3.5 billion kuna, which the Agency is obliged to pay back on the basis of insured savings, a total of 1.14 billion kuna has been paid back from allocated and the agency's own funds. The Agency's obligations on October 20 amounted to 2.37 billion kuna. Since this amount does not include "very certain potential obligations" of the banks and savings banks for which the Croatian National Bank (HNB) has suggested bankruptcy proceedings, which have not started yet, one must have in mind securing an additional 36.2 million kuna. Wishing to enable the citizens to have their insured deposits (up to 100,000 kuna) at their disposal and distribute the fiscal cost over a period of several fiscal years, the government has prepared the proposal on issuing government bonds. From the paid funds the Agency will fulfil its obligations regarding insured deposits. The law envisages the recruitment of an issuing agent for the implementation of the procedure of issuing the bonds. The procedure will be implemented in two phases: 1.7 billion kuna would have the maturity date of 2005 and the maturity of 800 million kuna will be 2003. The interest will be paid semi-annually and its amount would be the same as the interest on similar bonds whereas the capital sum will be paid in full upon maturity. (hina) jn rml