To be Croatian and Have Your Debt Written off!*
Croatian government have gotten creditors on board a plan to erase the debts of some 60,000 poorest citizens. The “fresh start” scheme targets less than 1 percent of the entire debt, but is hoped to boost the economy in the long-term.
The unorthodox measure was voted for by the government on January 15 and comes into force on Monday. To be eligible to participate debtors must have no savings or property, have a debt no greater than about $5,100 and live on welfare or an income of no higher than $138 per month.
“We assess that this measure will be applicable to some 60,000 citizens,” Deputy Prime Minister Milanka Opacic said as he was introducing the bailout. “Thus they will be given a chance for a new start without a burden of debt.”
Some $31 million worth of bad debts are expected to be written off by creditors who have signed up to the government’s scheme. Those include several banks, telecommunication companies, major utilities, several major cities and municipalities as well as the government’s own tax agency. None will be refunded for their losses.
The program would return access to bank accounts to about 20 percent of the 317,000 Croatians, whose accounts were frozen in July last year due to debts. The entire population of the small Mediterranean nation is 4.4 million.
“This is the first time that any (Croatian) government is trying to solve this difficult problem and we are proud of it,” Prime Minister Zoran Milanovic told a cabinet session.