This move should help reduce the country's external debt by 4.4 billion kuna, Finance Minister Ivan Suker told reporters in Vukovar where the Ivo Sanader cabinet held a session today.
Interest on the loan is 2.63 percent, namely the six-month Euribor increased by 0.45 percent.
The first EUR 250-million installment should be paid back at the end of January 2009, and the second will be paid back a year later.
During the closed-door session, the government also decided to relieve Zeljko Tica of duties as chairman of the fund for the reconstruction and development of Vukovar.
No explanation for this decision was given. Reporters only received information that Tica's dismissal was made at the proposal of Development Minister Bozidar Kalmeta and the authorities of this eastern city.
The government appointed a working group for cooperation with the German state Baden-Wuerttemberg.
The Sanader cabinet verified contracts on the sale of two agribusinesses to the private company Agrokor.
Thus, the former state-run companies 'Belje' and 'Vrbovec' will be owned by Agrokor, which pledged to revitalise the two ailing agricultural and processing plants and cover their debts.