Follow Us

Follow us on Twitter  Follow us on LinkedIn

06 November 2013

Bloomberg: Croatia may turn to IMF as debt grows 'risky', Linic says

The EU's newest member may seek assistance from the IMF, as next year's borrowing needs become "enormous and very risky", Finance Minister Slavko Linic said.

Croatia needs to borrow 44 billion kuna ($7.7 billion) next year to refinance debt and service a budget gap of 16 billion kuna, Linic told Zagreb-based weekly magazine Globus. Government spokeswoman Zinka Bardic confirmed Linic’s statements by phone. “At a high interest rate of 5 to 7 per cent, depending on whether we will borrow at home or abroad, for us this is an enormous and very risky level of debt", Linic said in an interview. “In cooperation with the IMF, borrowing conditions would be much more favorable. And we will need any help we can get.” He said aid was a “possibility that we cannot dismiss".

Croatia’s economy should grow 1.3 per cent next year, fuelled by state investment, Linic said. That differs from a European Commission forecast made yesterday for 0.5 per cent growth in 2014 and a contraction of 0.7 per cent this year.

The Commission will initiate a report on Croatia’s excessive deficit, triggering the EU’s monitoring system for budget offenders, which applies to economies where the gap exceeds 3 per cent of GDP, Olli Rehn, the EU’s commissioner for economic and monetary affairs, said yesterday. Linic said he’d argue against further spending cuts as a way to rein in the deficit.

“Further merciless cuts will be dangerous", Linic, who’ll present the 2014 budget at a cabinet session next week, told Globus. “You can always find space to cut, but at what price? In the current conditions, that could be very, very risky.”

Full article

© Bloomberg

< Next Previous >
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information

Add new comment