ZAGREB, March 29, 2018 – The government on Thursday gave the go-ahead to Croatian road companies to borrow 1.8 billion euros from banks with state guarantees, announcing the further restructuring of the road sector.
Addressing a cabinet meeting, Prime Minister Andrej Plenković said that the sector’s debt in the amount of 1.275 billion euros had been refinanced last year “at the best ever interest rate and the best ever maturity, until 2030.”
“The 1.8 billion euro loan has now been refinanced, also for a period of 12 years and at an interest rate of 1.95 percent. Thus we have settled slightly over three billion out of the total of five billion debt of the road sector. The Croatian public has forgotten about the initiative to monetise the road sector debt, which was one of the solutions of the former SDP government just a few years ago,” the prime minister said.
He said that financial restructuring had been completed and business restructuring was under way, after which these companies would be able to service their debts on their own. “These are great strategic steps forward,” Plenković said, emphasising that in this way 50 million euros would be saved on interest annually.
The loans approved by the government amount to 1.8 billion in total, of which motorway operator Hrvatske Autoceste will borrow 1.41 billion euro, road operator Hrvatske Ceste 467 million euro and the Rijeka-Zagreb Motorway operator 202 million euro.
The loans are to be repaid by March 31, 2030 at an interest rate determined on the basis of the six-month Euribor reference rate increased by a margin of 1.95 percentage points annually. If the Euribor rate is negative, the reference rate is zero. The loans are backed by state guarantees.
“These decisions will ensure the stability of the road sector over the next 15 years as their debt has finally become sustainable. The motorways remain in the hands of Croatian citizens and the system is being reformed to make it cost-effective,” Transport Minister Oleg Butković said, adding that about 60 percent of the sector’s debt had been refinanced to date. He said he expected the debt to be fully repaid by 2030.
Finance Minister Zdravko Marić said that these transactions would not increase public debt, specifying that the road sector’s debt accounted for 13 percent of public debt.
