|Village of Bobodol, near Knin, in central Croatia (Reuters / Antonio Bronic)|
In addition to debt erasing Milanovic’s government is considering other measures to help its debt-stricken citizens amid the economic recession, which has been plaguing the country for six years in a row. Zagreb wants to follow the example of Bulgaria and fix a favorable exchange rate for mortgage loans taken in Swiss francs.
The Swiss currency was popular among lenders due to its long-running stability, and mortgage loans denominated in francs were popular in many Eastern European nations. But the economic turmoil in the Eurozone put pressure on the Swiss franc, which was pegged against the euro since 2011, when market volatility made investors rush to the Swiss safe-haven currency.
|Prime Minister of the Republic of Hungary Viktor Orban (RIA Novosti / Aleksey Nikolskyi)|
The pegging ended in mid-January, sending the franc’s value up 20 percent against other currencies. This led to franc-denominated debts costing much more for foreign borrowers.
Hungary was lucky to dodge the damage due to a program launched by the government of Prime Minister Viktor Orban in 2011, which forced a conversion of franc-denominated mortgages into the Hungarian national currency at a fixed rate. Banks operating in the country took the hit, but now the Hungarian government is celebrating saving its citizens from a hard fall.
Poland and Romania are considering a similar move, while Croatia has amendments to its Credit Institutions Act already floating in the legislature.