While millions of people around the world continue to struggle with debt and the gap between the rich and the poor widens, the Balkan state of Croatia has announced an innovative scheme that will provide a fresh start for its poorest citizens – completely wiping their debts and restoring bank access to frozen accounts.
The scheme, which will completely wipe out the debt of 60,000 of the countries poorest citizens was announced in January of this year and came into force last week.
To be eligible for the scheme, debtors must have no savings or property, have a debt greater that $5,100 and be living on welfare or income of no higher than $138 per month.
The scheme is expected to wipe off around $31million of bad debts, with creditors including large banks, credit card companies, utility companies and the Croatian government’s own tax agency.
Some 317,000 Croatians had their bank accounts frozen last year due to bad debts and this initiative is expected to return access to at least 20% of the frozen accounts.
Addressing his cabinet Croatian Prime Minister Zoran Milanovic (below) said ‘This is the first time that any (Croatian) government is trying to solve this difficult problem and we are proud of it’.
It is anticipated that Poland and Romania will announce similar debt write off initiatives in the coming months.
With many people in the world’s so called ‘richest countries’ struggling to cope with debts, hats off to Croatia for taking the initiative and doing something that will make a real, tangible difference to the lives of its poorest citizens. US/UK etc take note.