New Highway Loan Causes Unease in Croatia
As the Croatian government offers to guarantee another new bank loan for the indebted highways, economists and advocates of publicly run highways disagree on the way to go.
|Highway near Croatia's coast. | Photo: Wikimedia Commons|
Croatian Highways, HAC, the company managing most state-owned highways, needs new cash to cover previous loans, mostly taken out for the construction of highways.
A government attempt to offload the highways through concessions failed in April, after the constitutional court ruled that the government would have to put the issue to a referendum.
Since then, the government has had to explore new ways to refinance the debts run up by HAC and by the second company managing the highways, the Rijeka-Zagreb Highway, ARZ.
The bank loan is also being given on condition that the government goes ahead with the reconstruction of HAC and offers some of its shares on the market.
In 2016 alone, HAC needs to repay 575 million euro in loans. The failed concession was expected to bring in some 3 billion euro for a concession lasting between 30 and 40 years.
Mijat Stanic, head of the Roads Union and leader of the civil initiative opposing the concession plan, told BIRN that refinancing the debts of the state highway companies is “necessary and welcome.
“The only thing in this government’s decision, the condition given by the bank... is the privatization of the operator [HAC]. I don’t know what this means... If it means selling the company, than again it should be done through a referendum," he said.
Stanic led a group of unions and NGOs that petitioned for a referendum against the concession of highways, claiming that the highways were public assets and should be run by state companies, partly because privatisation would mean higher prices for tolls.
The initiative collected over 460,000 signatures and the government then withdrew its decision, after which the constitutional court passed its ruling.
Stanic said the only acceptable solution was refinancing part of the debts along with the offer of state bonds - without selling or offering the highways in concessions.
“This is the right model since loans are quite easily available nowadays,” he said, adding that one big loan, taken out over a longer period, should be used to repay a number of short-term loans.
He added that apart from HAC and ARZ, the whole state road and highway sector needed restructuring.
According to Stanic, all the companies managing highways and roads should be integrated into one, which would cut costs, especially in terms of administration and management.
Damir Novotny, an economic analyst, told BIRN that the current model of refinancing th3 debts of the highways functioned “like a snowball effect...getting bigger and bigger.
“Since they [the HAC and ARZ] can’t borrow money on their own, the state comes in and these guarantees enlarge the public debt of the country,” he said.
He said that all the loan instalment repayments due in 2016 and 2017 would have to be covered by new loans, for which the state would again need to give fresh guarantees and so increase the public debt even more.....