Boris Lalovac

A consortium of international banks, involving the major part of Croatia's banking system, on Thursday announced a lawsuit against the Croatian government's over its decision to solve the problem of loans in Swiss francs by converting them into euro.

Croatian Finance Minister Boris Lalovac is running against the clock to find a solution to the problem of citizens who took out loans in Swiss francs that have now become too costly to repay.

The government intervened in January, freezing the exchange rate with the franc for a year, after it soared in value by 20 per cent, in a move to stabilise the problem of rising interest rates.

Croatia's tax administration and Office for the suppression of corruption and organised crime, USKOK, has given 14 people holding the 20 largest accounts in banks in 19 EU countries ten days to state the origin of the money and confirm if it was taxed.

Around 225 million euro are deposited in the 20 accounts, on which the owners received 6.6 million euro in interest in 2014.

The Croatian government announced the tax hikes on Thursday in a bid to halt the growing state budget deficit - a move that it said would raise an extra 79.2 million euro annually.

The European Commission on Wednesday said it plans to introduce strict economic monitoring on Croatia, alarmed by the imbalanced state of the economy.

Stressing that the situation calls for "decisive political action and special monitoring", the Commission said a subsequent decision on activating Excessive Imbalance Procedures, known as EIP, will be made known in May.

Croatia plans to raise cash by selling an additional billion euro of state bonds.

The economy ministry has commissioned four top banks - Barclays, Erste Group, JPMorgan and UniCredit - to arrange the issue of this new edition of euro bonds.

The Minister of Economy, Boris Lalovac, first announced this new edition of euro state bonds back in December.

INDEX

By publishing state bonds, finance minister Boris Lalovac indebted Croatia for another billion euro. Lalovac hopes that interests on bonds will be fewer than four per cent, due to generally low interests on European money markets.

VECERNJI LIST

Croatia's centre-left government has presented a rebalanced state budget for 2015, cutting the deficit by some 390 million euro from about 2 billion euro to 1.57 billion euro, or 3.9 per cent of GDP.

Finance Minister Boris Lalovac held talks with all ministers to see where cuts in spending were possible.

Croatia's centre-left government is mulling tough new measures to deal with a high budget deficit of 5.8 per cent of GDP and a general government debt equivalent to 81.7 per cent of annual GDP.

One of the world’s top credit rating agencies, Fitch Ratings has lowered Croatia’s long-term credit rating in foreign currency from BB+ to BB, lowering its domestic currency rating from BBB- to BB+.

Standard & Poor’s has given Croatia a BB rating since the start of the year. Croatia’s rating with Moody’s remains BB+.