The debts of more than 150,000 Croatians who each owed the state up to 10,000 kuna (€1,350) plus interests, totalling 1.39 billion kuna (€188 million), have been written off on Saturday, when the law on writing off debts went into force, Prime Minister Andrej Plenkovic said on Monday.

He said that in order to deal with the growing problem of insolvent persons whose bank accounts have been frozen due to debt, the government had proposed three bills which the parliament had passed – the three measures include the write-off of persons’ debts; new regulation on the seizure of cash assets; and the amendments to the Bankruptcy Act.

Although all debts should be paid, it is the government’s job to help indebted citizens, Plenkovic told reporters.

“We are a government aware of the difficult situation some of our fellow citizens have found themselves in, we are socially sensitive and, with these three bills, we wished to resolve part of the problem of as many as 326,379 of our fellow citizens whose accounts were blocked as of May 31, 2018,” Plenkovic told reporters in a news conference.

Their total debt of more than 326,000 Croatians with blocked bank accounts is around 43.6 billion kuna (€5.9 billion), plus about 22 billion kuna (€3 billion) in interests, Plenkovic said, adding that the goal of the law was to write off smaller debts of up to 10,000 kuna, owed to either the state or state-owned companies. The measure would apply to citizens whose bank accounts were blocked as of December 31, 2017.

Of the 1.39 billion kuna written off over the weekend, the principal amounted to a little over 846 million kuna (€114 million), and the interest to nearly 492 million kuna (€66 million).

Since the law envisaged that physical persons’ debts would be written off also by local government and private creditors, Plenkovic appealed to them to follow the government’s lead.

“In order to motivate them, the law includes provisions on profit tax and income tax breaks, so that those creditors too… can show social responsibility towards citizens whose accounts have been blocked a long time,” Plenkovic said.

He added that the law also includes plans for a tax debt rescheduling model.

The law on the seizure of cash assets, coming into force in early August, aims to discourage bank account freezes for more than three years. Plenkovic said the government expected this law to reduce the number of citizens with blocked accounts by 70,000, and the amount of the assets blocked by 30 billion kuna (€4 billion).

The Bankruptcy Act will go into force in early 2019. It is expected to simplify the bankruptcy procedure for over 80,000 people who owe up to 20,000 kuna each.

Plenkovic said all these measures were aimed at reducing the number of citizens with blocked accounts by 150,000, and the debt owed by 33 billion kuna.

As for the new distraint bill, he said the aim was to make provisions “swifter, simpler and much cheaper” as well as “to protect the dignity and livelihood of debtors.”

Plenkovic said he was confident that all these legal solutions would affect over 320,000 citizens with blocked bank accounts.

(€1 = 7.39 kuna)

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