Croatia cancels the debts of its poorest citizens

Whilst the world's economic powerhouses such as the US, the UK, and the G7 countries fall over themselves in attempts to hand bankers bigger and bigger cheques, like some kind of circle-jerk which ends with everyone cleaning up the mess with tax payer money, Croatia is taking a different direction. Instead of bailing out banks, the country has decided to bail out its people. Its poorest people at that.

It sounds too good to be true, but as of Monday it will be true. The initiative called Fresh Start has been introduced to quite literally give approximately 317,000 bank accounts in Croatia a fresh start. By wiping the debts of hundreds of thousands of people, they are no longer chained by repayments and struggles to reach said repayments.

This is aimed at those who cannot pay their debts primarily. Those who have debts far beyond their weekly income, with no other means to pay it off. This means they can't own any property which they could remortgage or sell, and nor can they have a substantial amount of savings of their own. Nevertheless, the initiative will be a welcome one to many, many people.

Zoran Milanovic

Zoran Milanovic

The scheme is likely to cost over $30 million, but many banks and lenders have been convinced by the new President, Zoran Milanovic of the Social Democratic Party of Croatia, to clear the debts of numerous customers without reimbursement. Whilst this only accounts for about 1% of the nation's debt, it's giving new hope and spending power back to the poorest - those who truly are trapped by their finances.

Does this make economic sense? Some would argue yes, others no. The long-clung to belief in trickle down economics is being eroded, as countries such as the US and the UK see the flaws of the system. That so-called 'trickle' is less than a sporadic drip-drip of money, with middle classes and the poor barely seeing any benefits whilst the rich benefit from government schemes. It is argued by many economists that to actual spur on national growth, we need the 99% spending, not the 1%, and thus a move like this one in Croatia could be the tip of the iceberg in a new economic policy.

At the very least though, this is an incredible social policy wrapped up in economics. Giving those with no hope a reason to live again - some 317,000 people - is an exciting move and I hope that other countries follow suit.