(Adds finance minister comment, para 4)
ZAGREB, March 16 (Reuters) - Croatia is liaising with the World Bank to manage the huge debts its state-owned road management companies have piled up to modernise and extend the highway network across the country, Finance Minister Zdravko Maric said on Thursday.
Croatia has recently been in talks with the international lenders, most notably the World Bank, to agree on how to handle a debt which cannot be covered from business revenues of the country's extensive highway network.
Maric told a cabinet session that he believes a financial arrangement will be reached in the second half of the year after the World Bank approves it.
"The arrangement could include a bond issue on the foreign markets in the third or fourth quarter with a guarantee from the World Bank," Maric told a news conference.
The overall debt, accumulated from 2001 when Croatia began to modernise its road and highway infrastructure, is worth 5.2 billion euros ($5.57 billion), or 13.5 percent of the country's overall public debt. Some 1.14 billion euros mature this year. A huge portion matures within the next three years.
The government made its top priority to reduce the public debt by 10 percentage points by the end of the mandate in 2020. Currently Croatia's public debt is close to 85 percent of gross domestic product.
Transport Minister Oleg Butkovic said that the restructuring plan, which will be submitted to the World Bank, should guarantee the future business sustainability of the Croatian highways. The plan also involves an increase in tolls and could lead to job cuts.
The youngest European Union member relies heavily on tourism on its Adriatic coast and the highway network was extended to improve access to the coastal destinations. ($1 = 0.9340 euros) (Reporting by Igor Ilic, editing by Pritha Sarkar)