Good question. I wonder what data-based research supported this decision? Could Croatia have recognized that continuing the debts of its poorest citzens cost the rest of it's citizenry more than if those debts were erased. I'd be interested to see the math behind this decision.
Maybe it's similar as Henry Ford recognizing that by paying his workers more, he created an additional market for Ford products. Get the yoke of debt off the most burdened Croatians and also relieve a burden on the Croatian economy.