Gov't to give its consent to HRK 1.25 bln loans to be sought by HZ Infrastruktura

At its session on Thursday the Croatian government is expected to give its consent and guarantees to the HZ Infrastruktura railway maintenance company to seek two loans in the amount of HRK 1.25 billion to upgrade and build railway infrastructure and provide for surplus workers.

A HRK 1 billion loan would be used to finance the renovation of four railroads with the total length of slightly less than 160 kilometres, and the loan would be taken from a bank syndicate consisting of Erste&Steiermaerkische Bank, Societe Generale-Splitska Banka and OTP Bank.

The loan would be repaid over a period of six years and the interest rate would be tied to the six-month EURIBOR plus a fixed margin of 4.60% per year.

A loan amounting to HRK 250 million, to be sought from a bank syndicate made up of Istarska Kreditna Banka Umag, OTP, and Privredna Banka Zagreb (PBZ), would be used to provide for redundant workers in HZ Infrastruktura in line with the company's overhaul programme and business plan for the period from 2014 to 2018. The loan would be used to finance the company's outlays for stimulating severance packages so far as well as for future severance packages which it will not be possible to finance from a European Bank for Reconstruction and Development loan.

In the period from 2011 to June 2014, the company paid stimulating severance packages and trimmed the number of its workers and workers in its daughter companies by 1,397. Stimulating severance packages in the amount of HRK 200.7 million were paid to 1,102 workers. The payment of severance packages for the remaining 295 redundant workers will require an additional HRK 57.3 million.

According to the company's business plan for 2014-2018, between 1 July 2014 and the end of 2018, HZ Infrastruktura is to lay off 495 workers, providing them with stimulating severance packages in the amount of HRK 91.6 million in total.

The 250 million loan would be repaid over a period of four years, with the six-month EURIBOR interest rate plus a fixed margin of 5.35% annually.

The government will on Thursday also discuss a bill on agriculture which, among other things, defines preparations for and the procedure of adoption and implementation of the National Rural Development Programme for the 2014-2020 period.

The government is also to consider a bill of changes to the Budget Act, introducing, among other things, the obligation to make a public debt management strategy and monitor its implementation.

Also on the agenda of tomorrow's session will be a decision on allocations for cultural, educational, scientific, health and other programmes of interest to the Croat people in Bosnia and Herzegovina as well as for assistance to flood-hit areas in the neighbouring country, in the amount of HRK 20 million.


(Hina)