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Agrokor crisis likely to hurt Croatia's GDP - central bank
April 6, 2017 / 9:00 AM / 8 months ago

Agrokor crisis likely to hurt Croatia's GDP - central bank

ZAGREB, April 6 (Reuters) - The financial problems that have hit Croatia’s largest food concern, Agrokor, will almost certainly have an impact on the country’s gross domestic product, the central bank governor said on Thursday.

Agrokor, the biggest food producer and retailer in the Balkans with 60,000 employees, and its main creditors have hired foreign restructuring experts led by consultants Alvarez & Marsal to rescue it after it built up debts of about 45 billion kuna ($6.4 billion) - or six times its equity - during its expansion.

“The crisis in Agrokor will almost certainly have consequences on GDP,” Boris Vujcic said in an interview for the Vecernji List daily.

“The (negative) effects could be particularly pronounced if we witness a disorderly way out of this situation. If the whole process gets well managed and coordinated, the consequences for GDP could be much milder,” he said.

The consultants said on Wednesday the first task was to secure liquidity for Agrokor and that it was in talks with a potential creditor. Local media reported that a cash injection could amount to some 300 million euros ($319.4 million).

“We still don’t know the details of (Agrokor‘s) restructuring process, so we can’t calculate what exactly the effect on GDP could be,” governor Vujcic said.

Croatia, the youngest member of the European Union, suffered six years of recession from 2009 to 2014 that wiped out more than 12 percent of its overall output, and has started recovering in the last two years.

The government is hoping for economic growth of 3.2 percent this year after a 2.9 percent expansion in 2016. Croatia needs to register faster growth to help raise funds worth almost 3.5 percent of GDP just to pay the interest on its public debt. ($1 = 7.0039 kuna, 0.9394 euro) (Reporting by Igor Ilic; Editing by Hugh Lawson)

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