World Bank Supports Croatia’s Firms Hit by COVID-19 Pandemic
ZAGREB: Tamara Perko, President of the Management Board of the Croatian Bank for Reconstruction and Development (HBOR) and Elisabetta Capannelli, World Bank Country Manager for Croatia, signed a Loan Agreement for the HEAL Croatia Project (Helping Enterprises Access Liquidity) in the amount of EUR 200 million (US$242 million equivalent). The Croatian Deputy Prime Minister and Minister of Finance, Zdravko Marić also signed a Guarantee Agreement with the Bank for the Loan. The HEAL Croatia Project will provide liquidity and financial restructuring to firms that have been hit by the COVID-19 pandemic and by the two devastating earthquakes of 2020 and will support an inclusive and resilient recovery.
The COVID-19 crisis has caused a sharp decline in the economic activity of Croatian businesses and has had a profound effect on jobs and livelihoods. The pandemic disrupted firms’ production and reduced the demand for their goods and services, while the financial sector tightened lending to companies, due to rising credit risk. The crisis also exacerbated Croatia’s regional disparities and reduced credit access for young firms and for firms owned and managed by women.
To mitigate such negative effects, the HEAL Project will increase access to finance to firms focused on export, both small and medium enterprises (firms employing fewer than 250 people) and mid-caps firms (employing from 250 to 3000 people), as well as for firms from less developed regions of Croatia, and firms owned or managed by women. It will also increase access for young enterprises (operating less than five years). The Project will support HBOR’s continued development through improved business processes, strengthened sustainability and climate change resilience, and use of EU funds.
“The loan being signed today represents a continuation of the significant support provided by the World Bank to the Republic of Croatia since the beginning of the crisis in 2020, which is reflected in operations worth a total of EUR 760 million (including HEAL). With this project, we are contributing to the further recovery of Croatia’s private sector, following the existing measures of the Government of the Republic of Croatia adopted in the context of the COVID-19 pandemic, post-earthquake reconstruction and creating foundations for future sustainability and resilience,” said Zdravko Marić, Deputy Prime Minister and Minister of Finance of the Republic of Croatia.
“Terms and conditions granted by the World Bank will provide us an additional source of finance for granting further favorable loans to our entrepreneurs. We are pleased that the World Bank has recognized the significance of financing entrepreneur groups whose importance has also been recognized in HBOR’s five-year strategy. Exporters and entrepreneurs in underdeveloped areas are among them. In addition to granting favorable financing terms, the World Bank will support us in improving our Environmental and Social Management System. This will be important as HBOR’s activities in the coming period will be particularly committed to building more capacity for supporting sustainable projects and inclusive growth,” stated Tamara Perko, President of the Management Board of HBOR.
“We look forward to a smooth and quick implementation of the HEAL Croatia project which will help preserve jobs and support household livelihoods through direct support to approximately 150 firms employing around 25,000 people. The Project will contribute to a resilient, inclusive and sustainable recovery of Croatia, which has been hard hit by the global pandemic, the economic recession, and the devastating earthquakes of March and December 2020,” said Elisabetta Capannelli, the World Bank Country Manager for Croatia.
The HEAL Croatia project complements two other World Bank crisis operations approved last year, the Croatia Crisis Response and Recovery Program and Earthquake Recovery and Public Health Preparedness Project – worth together US$ 500 million, to help mitigate the effects of the economic shock, advance recovery, facilitate earthquake reconstruction and strengthen national systems for public health preparedness for pandemic outbreaks. The Justice for Business Project focused on improving the business regulatory procedures and justice service standards for businesses and citizens was also approved in March 2020, bringing the World Bank support to the country to EUR 760 million under the ongoing Country Partnership Framework.
The World Bank has been a partner to Croatia for over 27 years. During this period, the Bank has supported more than 50 projects, worth almost US$5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies. The Bank’s current program focuses on mitigating the economic and social impact of COVID-19, post-earthquake reconstruction, transport, justice, innovation, business environment, land administration, science and technology, and economic development of the Pannonian region.