The government on Thursday decided to launch the procedure to conclude a €200 million framework loan agreement between Croatia and the Council of Europe Development Bank (CEB) intended to support incentives related to the COVID-19 pandemic.
Early in April, the Ministry of Finance sent the Council of Europe Development Bank a request for support primarily to the health system and local government in order to ensure the continuation of providing public utility services, Finance Minister Zdravko Maric said.
The LD 2056 (2020) project related to the COVID-19 pandemic was approved in May and CEB identified it as a project of high social effect which supports the government emergency measures to curb the consequences of the pandemic and reduce the effects of the crisis on citizens.
Today’s decision adopts the draft framework agreement for the €200 million loan which will be support for the state budget and will be earmarked for several purposes, he explained.
These measures include curbing the spread of the disease and its consequences, maintaining broad access to medical services, ensuring the necessary pharmaceutical products, medical needs and protective equipment and as support to local government to ensure the continuation of public utility services due to the impact of a reduced income caused by writing off or deferring tax dues.
The loan has been secured at very favourable terms with a fixed interest rate of 0.24% and a variable interest rate based on the six-monthly EURIBOR rate increased by 0.36% of the fixed interest rate margin.
The repayment period is 12 year with a three-year grace period on the principal. Maric added that there were no additional costs or fees. The loan will be absorbed in installment with the first tranche being at a maximum value of 75% of the loan, he added.
Croatia was admitted to the Council of Europe Development Bank on 24 July 1997 and to date the bank has supported several projects in Croatia with a high social visibility with 22 agreements valued at more than €1 billion. Fourteen of these loans were taken directly by the state and eight were agreements between CEB and the Croatian Bank for Reconstruction and Development (HBOR).
