(Adds finance minister comment, para 4)
ZAGREB, March 16 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
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)