Frankfurter Allgemeine Zeitung: Could Agrokor’s Collapse Be Useful For Croatia?

Lauren Simmonds

The respected German publication poses an interesting question that understandably hasn’t found itself in the forefront of the minds of many people in Croatia…

Poslovni Dnevnik brings us an interesting topic in relation to the Agrokor mess on the 21st of October, 2017, although Agrokor is grossly endangering the Croatian government and numerous banks, could this entire disaster of a situation somehow prove beneficial to the country in the long run? Unlikely, you may automatically assume, but some experts have other ideas, so do read on…

As bizarre as it may sound at first, some experts in this highly complex field hope that this messy crisis could have a potentially positive impact (yes, you read that right) on the overall Croatian economy in the medium to long term, according to the German publication, Frankfurter Allgemeine Zeitung.

The collapse of the largest private Croatian company, Agrokor, could drag the government in Zagreb, more banks, and [more] co-operatives down into the abyss with it,” writes the respected and influential German daily newspaper, Frankfurter Allgemeine Zeitung, stating, as we all have come to know well, that the group is very much overwhelmed, reports DW.

It is reported that the [Agrokor’s] debts amount to six billion euros, which is almost Agrokor’s entire turnover in 2016, or 15% of Croatia’s total GDP. The article goes on to state which companies belong to the Agrokor Group in both Croatia and Croatia’s neighboring countries, and that the company, which is the most important player in the Croatian economy, employs a massive 60,000 people.

The article then analyses how too much borrowing has taken place, quoting Gunter Deuber of Reiffeisen Research by stating that “bizarre business moves and possible corruption” as well as some other things along the same lines have taken place within the huge group.

Deuber mentions the long recession that took place in Croatia, and also cites the aggressive expansion of Group-funded credit as the cause of the crisis and the fact that many lenders have not even had a proper overview of Agrokor’s “non-transparent structures”.

“The fiasco in Zagreb could also bring positive consequences. In Croatia, too little has happened to reduce the government debt,” Deuber criticises.

”Under this aspect, Agrokor should be seen as part of the natural cleaning process. Liquidation could reduce external debt in the medium to long term and strengthen the morale and market.”

Deuber states that with regard to the impact on small banks, this crisis could serve as a catalyst for the necessary consolidation, mentioning that the current (Croatian government) coalition could collapse, which in itself ”does not have to be a bad thing” for Croatia.

The same newspaper also makes a comment on the same subject that they might conclude that the fiery situation in Agrokor could actually bring something good to the country:

“The non-transparent interlinking will be removed, those liable will be punished, and creditors will become more cautious. It’s time for ”fair traders” in Croatia,” writes Frankfurter Allgemeine Zeitung.



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