Croatia may seek assistance from the International Monetary Fund as next year’s borrowing needs become "enormous and very risky," Finance Minister Slavko Linic said.
The European Union’s newest member needs to borrow 44 billion kuna ($7.7 billion) next year to refinance debt and service a budget gap of 16 billion kuna, Linic told Zagreb-based weekly magazine Globus. Government spokeswoman Zinka Bardic confirmed Linic’s statements by phone.
“At a high interest rate of 5 to 7 percent, depending on whether we will borrow at home or abroad, for us this is an enormous and very risky level of debt,” Linic said in an interview. “In cooperation with the IMF, borrowing conditions would be much more favorable. And we will need any help we can get.” He said aid was a “possibility that we cannot dismiss.”
Croatia, whose $63 billion economy hasn’t grown since 2008, has been hobbled by rising interest payments, debt held by state companies, a bloated public sector and unemployment approaching 20 percent. Prime Minister Zoran Milanovic’s 22-month-old government cut its 2013 growth forecast on Sept. 26 to 0.2 percent as the country will fail to benefit from its first year in the world’s largest trading bloc.