Report on negotiations with the International Bank for Reconstruction and Development adopted

The Report on conducted negotiations for the conclusion of the loan agreement between the Republic of Croatia and the International Bank for Reconstruction and Development for the Project of post-earthquake reconstruction and strengthening public health preparedness for a total loan value of USD 200 million was adopted at today's government session.

On 21 May 2020, the Government of the Republic of Croatia adopted the Decision on opening the procedure for the conclusion of the Loan agreement between the Republic of Croatia and the International Bank for Reconstruction and Development.

On 25 May 2020, negotiations were held at the Ministry of Finance between the authorized delegation of the Republic of Croatia and representatives of the International Bank for Reconstruction and Development, which resulted in the harmonization of the text of the Loan agreement for the project.

The total value of the proposed loan is USD 200 million (EUR 183.9 million), the repayment period is 14.5 years with a grace period of 5 years, the interest rate is 6-month EURIBOR + 0.75% of fixed interest margin, which is explained in the Minutes of the negotiations and accepted by the delegation of the Republic of Croatia.

The purpose of the project is to help the Republic of Croatia with the post-earthquake reconstruction in Zagreb and its surroundings in order to urgently establish the provision of necessary and essential services and improve institutional capacities for reconstruction and strengthen national systems for public health preparedness.

It is necessary to submit to the Bank the consent of the Government of the Republic of Croatia and the approval to the agreed documents that were the subject of negotiations on 25 May 2020.

As early as March 26, the Ministry of Construction and Physical Planning began communication with the World Bank, and from April they communicated almost daily and prepared documents according to an accelerated procedure. For this purpose, together with the Faculty of Civil Engineering in Zagreb and experts from the Croatian Chamber of Civil Engineers, the first estimates of the reconstruction costs were made.

Likewise, immediately after the earthquake, the Ministry of Construction and Physical Planning started to draft a comprehensive act pursuant to which the remediation of damaged facilities would be best approached. Under great involvement of the profession, a bill was drafted and submitted to public consultations. The law, and then the programme and other implementing documents, are however not enough in themselves. Apart from being complex in expert terms and implying an interdisciplinary approach, reconstruction will be extremely financially demanding. Therefore, the Government of the Republic of Croatia, in parallel to drafting the act, initiated the process of providing funds from other sources.

To recall, to date the government has secured funds for urgent remediation through budget rebalancing, as well as for temporary accommodation for all those who cannot return to their homes, which is believe to be the two most important measures for citizens in the short run. At the beginning of the week, the Ministry of Construction and Physical Planning called on citizens to call for assistance in emergency remediation, and applications will be made through the eCitizens system.

 

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