PM Kosor said this was the maximum that they were able to agree on.

"This is the maximum that we managed to achieve in the negotiations. As far as the government is concerned, we proposed several other measures which we believed that we could accomplish, but I repeat, it takes two to reach an agreement," Kosor said.

According to the agreement reached today, the amount of the deferred claim in the first six months would be interest-free and after that the annual interest rate would not exceed 3.95 percent.

The deferred period would be calculated in the Swiss currency and its amount during the said period of five years would depend on the exchange rate of the Swiss franc. Should the Swiss currency lose in value as against kuna, namely should it go down below HRK 5.8, "the lending balloon would be deflated", Privredna Banka Zagreb managing board president Bozo Prka said.

This means that after the period of five years or before that, should the deferred claim amount to zero, users of loan pegged to the Swiss currency would continue to pay off the loans according to the conditions stipulated in the original contract, and should the deferred claim be positive, banks will agree with the clints terms under which this amount would be paid off.

The first amended installments calculated based on today's agreement could be expected in October, Raiffeisen Bank managing board president Zdenko Androvic said.

The lowering of interest rates on loans is up to each individual bank and each bank would make a decision on this on its own, Androvic said adding that he expected this could take place in September or October.