ZAGREB, March 29 (Reuters) - Croatia has approved state guarantees for 1.8 billion euros ($2.22 billion) of loans that road-management companies will take from domestic banks to refinance their huge debt at more favourable terms.
The government has been working for about a year on ways to refinance the state-owned companies’ debt and in November issued a 1.275 billion euro bond maturing in 2030 to help meet repayments that could not be covered by revenue from the country’s highway network.
“With this decision we provide stability of debt-servicing and business operations for road-management companies in the next 15 years,” Transport Minister Oleg Butkovic told a cabinet session on Thursday.
The loans for three companies will have a 12-year maturity and an annual interest rate of 1.95 percent.
The total debt accumulated since Croatia began to modernise its road and highway infrastructure in 2001 is 5.2 billion euros, equating to 13 percent of Croatia’s overall public debt.
“The refinancing terms will save us 50 million euros a year on interest repayments,” Butkovic said.
The heavy spending on Croatia’s highway network was to improve access to coastal destinations that provide much of the tourism revenue on which the European Union’s newest member heavily relies. ($1 = 0.8124 euros) (Reporting by Igor Ilic Editing by David Goodman)