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Croatia Cancels Debt for Thousands of its Poorest

Prime Minister boasts that no government has ever taken such a move.
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Some of Croatia's poorest citizens will be offered a "fresh start" on Monday when the eastern European country's government cancels their debt in an attempt to kickstart the economy.

The large and unprecedented measure was endorsed by Croatia's left-wing government on January 15. Under the measure, citizens earning no more than 1,250 kuna ($184) a month, rent their property and are unable to pay off their debts will have liabilities worth up to 35,000 kuna ($5,146) wiped off. Power companies, banks, loan companies and telecom operators are included in the scheme. Prime Minister Zoran Milanovic boasted that no previous government had taken such a measure. "We are doing all we can to make people's lives easier in this protracted and strenuous crisis and give them a chance for a fresh start," Milanovic said in a press conference last month.Officials have stated that some 60,000 citizens will be covered by the plan, with the former-Yugoslav nation having an entire population of 4.4 million. An estimate from news agency Reuters said that the program could cost creditors as much as 2.1 billion kuna ($309 million).

The idea is to kick start the economy again and get consumers spending with their bank accounts unfrozen. Croatia - which is part of the European Union but not the euro zone - has been in a crippling recession for the last seven years.

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IN-DEPTH

-- Matt Clinch, CNBC.com