Government’s “Fresh Start” Agreement for Indebted Citizens

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Through an agreement with a number of major creditors, both private and public, the Government of Croatia has introduced a one-off scheme to write-off the debts of up to 60,000 of its poorest citizens. To qualify for the scheme, those in debt must have had their bank account blocked for at least a year on 30 September 2014. They should be recipients of social assistance or disability benefit, or have low household incomes. In addition, they should not have a total debt of more than 35,000 HRK (approximately EURO 4,577).

Whilst the scheme has attracted a great deal of international attention (it was “breaking news” on several TV stations and created a hype on Twitter), its impact will depend on the precise number of beneficiaries. As a one-off measure it seems unlikely to contribute significantly to either reducing poverty and social exclusion or stimulating the economy. It may be largely a “populist” measure in an election year.

Authors: Paul Stubbs & Siniša Zrinščak