Zagreb, 19 October 2009 - The Croatian Competition Agency (CCA) set a new temporary reference rate which now amounts to 5.21 % and which will apply from 15 October 2009 to 31 December 2009.The base rate is 7.63 %.

The purpose of this newly adjusted reference rate and further decrease in the base rate is to ensure aid grantors to grant aid particularly in the form of loans under the more favourable terms, where such aid must be in line with the State Aid Act. Namely, any soft loan (where the interest rate is lower than the set reference rate - balance between the granted interest rate and the set reference rate) given by the government or its institution constitutes state aid. However, given the cut in loans supply in the market and increase in interests due to the global financial crisis, the CCA decreased the base reference rate by 30 % and ensured the adoption of aid schemes and financing of undertakings in the circumstances of the current financial and economic crises. This temporary state aid measure authorised by the CCA is to ensure access to finance, similarly as in the EU, to the Croatian undertakings by the end of 2010, whereas the implementation of this measure depends on the resources available to aid providers. It must be noted that the reference and discount rates are applied as a proxy for the market rate and for calculating present values to measure the grant equivalent of aid where this base rate will be increased by a fixed margin depending on the rating of the undertaking concerned and the collateral offered.

The CCA also authorised state aid contained in the aid scheme of the Croatian Bank for Reconstruction and Development (HBOR) in the form of soft loans which will be granted to undertakings to improve their liquidity. The loan programme to improve liquidity provides for soft loans to small and medium-sized undertakings and big firms under the nominal interest rate of 7 %. State aid is thus, the balance between the temporary decreased base rate of 5.21 % increased by a fixed margin and the above mentioned 7 % interest rate for soft loans to improve liquidity. The aid scheme is in line with the Decision on the publication of the rules contained in the Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis (OG 56/2009). The cap amount of aid granted under this aid scheme and other aid schemes in line with the Temporary Framework and granted de minimis aid shall not exceed EUR 500,000 per beneficiary in the period from 1 January 2008 until 31 December 2010. Companies which were in difficulties on 1 July 2008 will not be able to receive support under the new measures.