Croatia cancels debt of 60,000 among country's poor

Thousands of impoverished Croatians are going to have their debts wiped out by their government, starting Monday.

The Washington Post reports that the Croatian government's ambitious $31 million “fresh start” initiative aims to help distressed citizens with significant-sized debts and no ability to repay.

The paper said Friday that the program targets the poorest of the poor among some 317,000 Croatians whose bank accounts have been blocked because of debt.

Under the plan, those who have racked up debts of less than $5,100 and earn less than $138 a month will be eligible for relief. That criteria applies to about 60,000 inhabitants of the small European country.

“I can’t think of anything comparable,” economist Dean Barker told the Post, while expressing reservations that it would work. “If lenders think this can happen again they will charge very high interest rates to low-income borrowers,” he said.