March the 27th, 2021 - Croatian businesses are set to get another very welcome cash injection of 200 million euros, but for the first time in the pandemic, HBOR will be the one which also needs to fulfill certain requirements.
As Poslovni Dnevnik/Marija Brnic writes, another 200 million euros will be available to Croatian businesses for favourable loans to provide liquidity in these continued difficult business conditions due to the coronavirus pandemic, which the Croatian Bank for Reconstruction and Development (HBOR) will receive through a loan from the International Bank for Reconstruction and Development (IBRD).
At a recently held session, the Croatian Government gave approval to Finance Minister Zdravko Maric to conclude an agreement with the IBRD on this arrangement, and the state will be a joint guarantor for HBOR's loan, which will be agreed for a repayment period of 30 years.
The project intends to use the largest part of the money for business loans for working capital, while another part of it, up to a maximum of 30 percent, would be directed to help in the financial restructuring of Croatian companies.
The loans would be intended for small and medium-sized Croatian businesses, in majority private ownership, primarily to exporters, with the inclusion of the so-called quasi-exporters, ie enterprises from the service sector of tourism and logistics, on whose business the ongoing coronavirus crisis left a negative mark, but they still managed to maintain financial sustainability.
Croatian businesses with poor access to capital and in less developed regions will have an advantage in accessing these loans, as will companies in which women are the owners or managers. The focus will also be primarily placed on younger companies, which have been on the market for less than five years.
The development bank says it will approve loans to Croatian businesses after a contract with the IBRD is concluded soon, and the conditions under which companies will have access are equal to those of standard working capital loan programmes.
What is specific when it comes to this particular new arrangement is the provision that out of 200 million euros, 120 million euros will be immediately available to Croatian businesses, while the remaining 80 million euros will be disbursed and disbursed by HBOR only after it meets certain additional conditions prescribed by the IBRD, which are related to strengthening the institutional capacity of HBOR as a development bank.
What the definition of HBOR's institutional strengthening encompasses will be made public after the IBRD announces the conclusion of its arrangement with HBOR.
However, this is, as was laid out in the government decision, the first time that such conditions are being incorporated into the Financial Intermediation Project for the institutional strengthening of HBOR, and the financing of activities to meet these conditions, as stated in the decision, is provided from EU structural funds and the European Commission's Directorate-General for Structural Reform Support, as well as from HBOR's own resources.
Finance Minister Zdravko Maric stated that he expects that this credit line to help Croatian businesses which have continued to be burdened with liquidity problems and it will also have a positive impact on commercial banks and encourage their stronger lending activity in monitoring the domestic economy, adding that he expects an additional 80 million euros to come in.
In using the funds set out by this credit arrangement, the Croatian Bank for Reconstruction and Development will be able, with the exception of doing so through models of co-financing with commercial banks and lending through them, to approve loans directly, but only for Croatian businesses operating in less developed regions, a maximum of 25 percent of the loan amount, according to market principles.
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