I have to give a big hat tip to Croatia for trying a new approach to help its poorest citizens find a way out from under unmanageable debt. The program, called “Fresh Start,” eliminates the debts of about 60,000 Croatians who have less than 35,000 kuna ($5,100), and monthly income less than 1,250 kuna ($138).
According to the Washington Post, economists are looking forward to the results of this grand experiment.
“I can’t think of anything comparable,” Dean Baker, co-director of the Washington-based Center for Economic and Policy Research, told The Washington Post.
Through this move Croatia will free about 20 percent of debtors from under crushing debt and give them a true fresh start, much like that experienced by people in the United States following a consumer bankruptcy filing.
For those critics who may feel this will only encourage people to run the debt back up again, the Croatian government disagrees. At the very least it will free up people to begin spending again and that’s what actually fuels economies. The Croatian economy has been flat with a 0.5 percent growth.
“We assess that this measure will be applicable to some 60,000 citizens,” Deputy Prime Minister Milanka Opacic told a cabinet meeting. “Thus they will be given a chance for a new start without a burden of debt.”
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