HBOR and IBRD sign EUR 50 million loan agreement

The Croatian Bank for Reconstruction and Development (HBOR) and the International Bank for Reconstruction and Development (IBRD) have signed a EUR 50 million loan agreement for the additional financing of the Croatia Export Finance Intermediation Project (CEFIL). The funds will be used to support the private sector's access to finance and to boost competitiveness as Croatia prepares to join the European Union.

The loan agreement was signed in Zagreb on Monday by HBOR Board Chairman Anton Kovacev and the head of the World Bank Office in Zagreb, Hongjoo Hahm. Hahm also signed a guarantee agreement with Finance Minister Slavko Linic.

The loan was granted at an interest rate of EURIBOR plus 0.95% (or around 1.3%, according to figures for October 24). It is to be repaid over 28.5 years and a grace period of 7.5 years.

The agreement has secured additional funding for the existing CEFIL project originally worth EUR 100 million and so far 57 firms including exporters and hotel companies have extracted funds through fiveyear loans for capital investments and to boost their liquidity at an interest rate of 4.8%, Kovacev said.

The most important effect of those loans is an increase in exports of those companies of more than 30%, with retained or increased levels of employment, he added.

The fresh funds will be used to finance exports and tourism projects over 15-20 years, which is the HBOR's longest-term source of funding. In the first nine months of the year, the HBOR placed HRK 4.4 billion through credit lines to exporters and the tourism sector, which was 30% more than in the same period of 2011, Kovacev said.

Hahm and Linic said that the agreement signed today ensured a relatively small amount of money, adding that ways would be found to provide exporters with additional funding next year, not just through loans but also through other forms of cooperation.

That is proof that the World Bank wants to help Croatia in seeking a solution to the crisis in the private sector. Regardless of the extent to which the Croatian government will rely on EU cohesion and structural funds after the country's accession to the European Union next year, it wants to continue successful cooperation with the World Bank, Linic said.

Kovacev said that the World Bank was expected to be a guarantor for a EUR 200 million issue of HBOR bonds, which is expected early next year, with the World Bank's AAA rating. (Hina)