Bankers claim that there will be money for small and medium-sized enterprises

Croatian companies must repay around 4 billion euros in debt by the end of next year, and that is just the principal. Banks, both foreign and domestic, due to the crisis that has restricted access to capital, do not have an unlimited supply of new loans available.

Our banks are additionally burdened by the state, which will also have to borrow domestically to refinance its obligations due to the lack of available capital in the global financial market. Fearing that the state will crowd out enterprises, the Croatian National Bank is timely releasing liquidity to banks, having recently reduced the required reserve rate and released 8.4 billion kuna to them. However, will this be enough if foreign banks, where companies have previously borrowed easily, are no longer generous (and they probably won’t be)? Companies will have to rely on what domestic banks offer them for both refinancing obligations and for any investments, as well as on the ‘treasuries’ of development banks such as the EBRD, the European Investment Bank, and the World Bank Group…

How much money do these institutions have available? The director of the EBRD’s Zagreb office, Charlotte Ruhe, says they are very much aware of the impact of the crisis on Central and Eastern Europe, and that they will invest around 7 billion euros in the region next year, which is 20 percent more than originally planned. Since the investments of this bank usually attract commercial partners, the bank expects that total investments could reach up to 20 billion euros. How much could go to small Croatia? Charlotte Ruhe states that the EBRD plans to invest up to 250 million euros per year, which is significantly more than the amounts in previous years. The money is intended for municipal economy, banks, industry, and agriculture, but the priority will be banks to ensure there is enough money for financing small and medium-sized enterprises. Ruhe mentions that several companies have already contacted them regarding difficulties in obtaining loans from commercial banks.

The World Bank will invest around 1.8 billion dollars in Croatia over the next four-year period, but this is mostly money intended for maintaining the stability and development of the country. However, the International Finance Corporation (IFC, part of the World Bank Group) will directly finance entrepreneurship. Namely, the IFC currently has four active projects in Croatia worth around 80 million euros, and another five projects, valued at 200 million euros, are in processing. Due to the increased risk caused by the global financial crisis, the IFC will focus during the next period on maintaining liquidity for otherwise well-off financial institutions, as well as credit lines and recapitalizations of companies, with a special emphasis on the agricultural sector, tourism, infrastructure, and renewable energy projects.

Additionally, the management of the IFC has requested and received from the Board of Executive Directors more than 5 billion dollars in emergency funds to assist financial institutions and corporations through short-term loans and recapitalizations (on a global level). The primary focus of the IFC is to provide support to financial institutions and their liquidity, ensuring that banks have enough resources to lend to small and medium-sized enterprises. According to the bank, HBOR will approve about 30 percent fewer loans next year, which means that entrepreneurs can expect around 4 billion kuna. Although commercial banks have not yet finalized their plans for next year, most bankers claim that there will be money for small and medium-sized enterprises. Whether it will be enough or not is another question. (Gordana Gelenčer)