(Adds details, background)
ZAGREB, Feb 4 (Reuters) - The Croatian central bank said on Wednesday it had cut the asset/liability ratio for banks to 25 percent from 28.5 percent to boost liquidity and make it easier for the state to borrow at home.
"The ratio was cut to 25 percent from 28.5 percent, which frees up around 840 million euros ($1.10 billion)," the bank said in a statement after a board meeting.
The aim of the cut, which the bank had already announced in December, was "to ease the financing of the state's budgetary needs in the current difficult circumstances", the statement said.
The asset/liability ratio regulates the minimum required amount of foreign currency claims against foreign currency liabilities and is calculated on a daily basis.
Wednesday's cut was coordinated between the central bank and the finance ministry, which needs funds to replace a 500 million euro bond maturing on Feb. 11 and service other locally issued bonds in March.
Earlier on Wednesday, a finance ministry source told Reuters the ministry had agreed with nine local banks to take a 20-month syndicated loan worth 750 million euros, with the interest rate at 6.9 percent.
The European Union candidate country has indicated it may tap foreign markets in the second quarter to finance its budget deficit, set at at 0.9 percent of gross domestic product. Some markets participants speculated this could involve a fresh Eurobond issue worth around 1 billion euros.
Croatia, which hopes to preserve some economic growth and financial stability in the face of the global crisis, also has to refinance a Samurai bond worth 25 billion yen ($280 million) that matures in June.
Many analysts and businessmen have urged the government to cut state spending further, and avoid the deficit altogether if possible, at a time of worsened borrowing conditions at home and abroad.
(Reporting by Igor Ilic; editing by David Stamp)