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Croatia: New Difficulties for Borrowers Ahead

Published: December 6, 2013; 07:53 · (Vindobona)

The Croat banking sector pegs the interest rates to the EURIBOR. Consumers may have to pay higher borrowing costs.

Croatia: New Difficulties for Borrowers Ahead / Picture: © Vindobona.org

In October, the Croat government and the Parliament have resolved a new credit act. Foreign currency loans must contain a fixed interested rate. The government intended to prevent that forex borrowers have to perform higher instalments in case of a strong increase in exchange rates. Loans nominated in euro or kuna have to be pegged to another reference factor. Due to the new legal framework, the Croat banking industry has to modify its lending conditions. Most Croat banks decided for the EURIBOR. At the moment, the EURIBOR is relatively low. However, Croat economists and consumer protectors warn of a rebound. In case of an economic recovery in the Eurozone, the EURIBOR would go up. According to the Croat newspaper “Vecernji List”, the change to the EURIBOR is as dangerous for Croat borrowers as the Swiss franc.