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Croatian govt adopts 30 bln kuna (3.9 bln euro) package to support coronavirus-hit economy

Author Iskra Pavlova
Croatian govt adopts 30 bln kuna (3.9 bln euro) package to support coronavirus-hit economy Croatian PM Andrej Plenkovic/Photo: Croatian government

March 19 (SeeNews) - Croatia's government has adopted a financial package worth 30 billion kuna ($4.3 billion/3.9 billion euro) to support the domestic economy suffering from the spread of the coronavirus disease, prime minister Andrej Plenkovic said.

The measures, now before parliament for approval, include deferral of payment of income and profit tax, social, health and pension contributions by three months, with an option to be postponed by a further three months, Plenkovic said in a statement on Wednesday.

"The main idea is to grant taxpayers a postponement for the payment of their dues because of the extraordinary circumstances, and then provide them with the opportunity to make interest-free payment in installments," Plenkovic said.

He added that the cost of the new measures to the state will reach 12 billion kuna for the first three-month period.

The measures also include interest-free loans to municipalities, cities and counties, as well as to the country's health and pension insurance institutes up to the amount of the due taxes and contributions whose payment has been deferred, Plenkovic said.

He added this liquidity gap will be compensated by the state budget.

Moreover, state-owned development bank HBOR and commercial banks are ready to freeze and delays on loan repayments, as well as to provide financing for working capital and for restructuring of existing loans. This includes approving loans for financing the payment of salaries, overhead costs and other basic operating costs, Plenkovic said, adding the cost of the credit deferral to HBOR and local banks is estimated at 17 billion kuna.

In addition, the government will finance 100% of the costs related to the payment of minimum net wages if companies do not lay off workers. This will cost the state budget some 5.0 billion kuna.

The package also includes special measures to support the tourism sector, such as deferral of payment of taxes to the state and municipalities, increased funding for micro and small entrepreneurs and for working capital, and faster payment of funding approved under EU projects, among others.

Plenkovic said that the European Commission is enabling the use of 174 million euro of liquid funds, which Croatia will use to make faster payments on projects co-financed by the EU.

The number of registered cases of the novel coronavirus disease (COVID-19) in the Adriatic country rose to almost 90 by Wednesday evening. Five people have recovered from the disease thus far

(1 euro = 7.59960 kuna)