The government program involves major local banks,
leading telecom operators, the four biggest Croatian
cities and several public utility companies. The
government will not pay the debts; the creditors
will simply absorb them.
Frankly in the absence of consumer bankruptcy laws it is clear why these particular creditors are willing to go along with this scheme, even though it will cost them some revenue, without much of a fight. These were likely amounts small enough, given the parameters of the debt-cancellation rules, that recovery was never a particularly practical option anyway. If the debt on the books of utilities or a bank is not good enough to sell to a third party and is not considered recovery internally then the accountants would be quite happy to simply have these amounts off the books and the corporations and governments probably reap more rewards in positive PR than the debts were worth.
The perhaps larger problem that I think is being solved here, besides the debt itself, is the bank account "blocking"[1] that appears to be a provision in current law that the government is not interested in changing. Once someone's bank accounts are blocked I presume that they are forced into the cash economy and that is bad for the government in lost taxes as well as citizens with respect to many things, including good old fashioned "getting ripped off".
The perhaps larger problem that I think is being solved here, besides the debt itself, is the bank account "blocking"[1] that appears to be a provision in current law that the government is not interested in changing. Once someone's bank accounts are blocked I presume that they are forced into the cash economy and that is bad for the government in lost taxes as well as citizens with respect to many things, including good old fashioned "getting ripped off".
[1] http://www.croatiaweek.com/over-300000-accounts-blocked-due-...