PM: Bond issued is an example of consolidated public finances

Prime Minister Andrej Plenkovic said on Thursday that yesterday's issue of a HRK 15 billion government bond, which will lead to a saving of HRK 716 million in interest, is an example of consolidated public finances, a healthy economic growth and Croatia's international financial position.

Acting on behalf of the government, the Ministry of Finance on Wednesday issued a HRK 15 billion bond in three tranches on the domestic market with different maturities - a HRK 5 billion bond was issued with a maturity of five years, a HRK 4 billion bond indexed to the euro will mature in 14 years, while a €800 million bond was issued with the longest maturity yet, of 20 years.

The issue that matures in 2025 has an annual interest rate of 0.25%, the one maturing in 2034 carries an interest rate of 1.00% and the bond with the longest maturity of 2040 has an interest rate of 1,25% annually.

At the start of the cabinet meeting on Thursday, the prime minister recalled that the latest issue will be used to refinance two bonds that mature on March 5, one worth €1 billion and the other HRK 5 billion, or a total of HRK 12.5 billion. They were issued in 2019 at an interest rate of 6.5% and 6.75% respectively.

Plenkovic noted that this was the first time that a bond had been issued with a maturity of 20 years.

"The most important thing regarding the cost of interest that we paid last year on the bonds that are now maturing, is that we will generate an annual saving of HRK 716 million. That means that we will now be paying about HRK 106 million while before we were paying HRK 825 million a year. That is an example of consolidated public finances, a healthy economic growth and of Croatia's international financial position," the prime minister said.

Plenkovic commented on the European Commission's report on macroeconomic imbalances, released on Wednesday, saying that it confirmed economic stability in the country with a growth rate of three percent, balanced public finances, a surplus in the current account and a further reduction of the public debt.

He said that the Commission noted that it is necessary to continue "reforms that have been launched over the past few years."

"Our economy is continuing to grow at the projected rate of 3% in 2019 and their projections for 2020 is a GDP growth of 2.6% and 2.3% in 2021. Their projections are even more optimistic than those we had six or seven months ago, before we adopted the budget. In any case, the Commission's recommendations will continue to be important in implementing the National Reform Programme," Plenkovic concluded.

Prime Minister Andrej Plenkovic said on Thursday that the public health situation regarding coronavirus is under control because Croatia recognised the situation on time, and he once again appealed to citizens to continue living as usual and to keep calm.

"Three cases have been confirmed, but the public health situation is under control. I appeal to citizens that there is no reason for stocking up on supplies and leaving the shelves in the shops empty. Live as usual, all services that are required to act are doing so, so please remain calm and responsible," Plenkovic said at a cabinet meeting.

He said that the government's aim is to secure health safety for citizens, emphasising that the national crisis team for COVID-19 is coordinating all activities and will continue to meet and inform the public on a daily basis.

The prime minister said that Croatia recognised the situation on time and now the most important task was up to health institutions and their staff, as well as other services.

"We, and in particular the economic departments, are trying to cope with the currently unforeseeable effects of these circumstances which are referred to as an external shock. Our objective is to bring any negative consequences to a minimum. We will be cautious," concluded Plenkovic.

Text: Hina

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