While the Prime Minister of Croatia, Dr. Ivo Sanader, is trying to delay another increase to the interest rates of loans given to individuals, especially home mortgage loans, companies have already started paying almost double previous rates.

This was indirectly confirmed by the President of the Board of Zagrebačka Bank, Mr. Franjo Luković, with a comment that this situation cannot be sustained and presents a problem. We have been informed by banking circles that currently companies cannot get loans with an interest rate below 10%. Only one year ago, the average interest rate for company loans was approximately 6 %. Entrepreneurs that have a shortage of operational capital are getting hit the most, while the bigger companies are facing interest rates no lower than 12 %. In a conversation with the Board President of a large Croatian company, Poslovni Dnevnik received information that only a few months ago he was able to get short-term loans with an interest rates up to 8% and now it is between 12- 14 %. All of the banks have become more rigid in their loan terms and such high costs for available capital is no longer ‘’reserved’’ for companies with financial difficulties that previously had difficulties securing financing. For such companies it has now become mission impossible. Entrepreneurs we interviewed requested anonymity and informed us that they have been experiencing more difficulties in doing business recently. Due to the significant increased costs of available capital, financing is becoming scarce and their projects are stalled and collecting dust in the drawers.
(AmCham)