The government on Thursday granted approval to Croatian road companies for borrowing from banks in the total amount of 1.8 billion euros and approved state guarantees, continuing the refinancing of debts in the road sector, with further business restructuring of that sector announced.
Prime Minister Andrej Plenković reminded that last year the debt of this sector was refinanced in the amount of 1.275 billion euros, at “never better interest rates, never better maturities, until 2030.”
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– Now a loan of 1.8 billion euros has been refinanced, also with a term of 12 years, an interest rate of 1.95 percent. Thus, we have practically resolved a little more than 3 out of a total of 5 billion euros of debt in the road sector in a way that has led the Croatian public to forget the initiatives for the monetization of Croatian highways, which was one of the solutions of the former SDP government just a few years ago, stated Plenković.
He added that financial restructuring has now been made, and business restructuring is also underway, after which these companies will be able to carry their debts through their operations.
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– These are significant, strategic moves, assessed Plenković, noting that this way an annual savings of 50 million euros in interest has been achieved.
– With this, there is no new borrowing, there are savings compared to existing financial arrangements of 50 million euros for annual interest, concluded Plenković.
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This concerns loans in the total amount of 1.8 billion euros, of which 1.41 billion euros for Hrvatske autoceste, 467 million euros for Hrvatske ceste, and 202 million euros for the Rijeka-Zagreb Highway.
The loans are approved for a term until March 31, 2030, with an interest rate determined based on the reference rate of the six-month Euribor, increased by a margin of 1.95 percentage points per year, and in the case that the value of Euribor is negative, the value of the reference rate is equalized to zero.
In the first three years, the loans are repaid semi-annually with a total of 5 percent of the principal of the loan, and the remaining 95 percent of the principal is repaid in the next 18 semi-annual installments.
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The government also approved the issuance of guarantees in favor of Zagrebačka banka, Privredna banka Zagreb, Erste&Steiermaerkische banka, Hrvatska poštanska banka, Splitska banka, OTP banka, Croatia banka, and Istarska kreditna banka for the borrowing of road companies.
Minister of Sea, Transport and Infrastructure Oleg Butković emphasized that these companies are granted approval for borrowing from a consortium of banks with state guarantees.
– By making these decisions, stability in the road sector will be ensured for the next 15 years, whose debt is finally becoming sustainable. We have kept the highways in the hands of Croatian citizens, and we are making the system sustainable and profitable through reform, said Butković, noting that so far about 60 percent of total road debts have been refinanced.
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He also stated that the savings on interest alone will cover the amount needed for the construction of the Pelješac Bridge. “With this, we stabilize the debt of the road sector and can say that we will make it self-sustainable,” said Butković, adding that he expects the debt of the road sector to be fully repaid by 2030.
Minister of Finance Zdravko Marić emphasized that all these transactions made do not increase public debt. The road sector, as he stated, accounts for approximately 13 percent of total public debt.
He also mentioned that a few years ago it was said that there was no alternative to the monetization or sale of roads or highways, and now the government has found a much better model as more favorable conditions in the financial markets have been utilized and a much higher quality set of measures has been made that shows that this sector remains in Croatian hands. He also believes that this sector will be managed well.
