Imagine meeting a fairy godmother that made all your debt disappear. (Bippity boppity boop!)

This fairy-tale scenario is set to become a reality for about 60,000 low-income Croatians who have been struggling to pay their bills.

The Croatian government, acting in place of a fairy godmother, has launched a program called "Fresh Start" that will cancel the debt owed by some of the poorest people in the country.

The state, alongside a number of banks, telecom operators, electricity companies, local governments and other firms, have collectively agreed to forgive debt worth up to 60,000 Croatian kuna ($8,830) per individual.

Croatia's economy is in the midst of a prolonged recession, with gross domestic product declining every quarter since the end of 2011.

This measure is expected to boost consumer confidence and spending.

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The program is designed specifically for households that made less than 2,500 kuna ($370) over the last three months and meet other financial criteria.

"This is for the bottom layer of debtors where there is clearly no chance that they will ever repay the debts that they have," said Otilia Dhand, a political analyst at Teneo Intelligence.

The government noted that it has never had a debt forgiveness program of this magnitude, but said this is a one-off initiative.

Dhand says the move was not a surprise since the government has recently lost support in the polls. She said this will give the government a popularity boost ahead of parliamentary elections, which are expected by the end of February 2016.

The International Monetary Fund has recommended a laundry list of reforms and overhauls to get the Croatian economy back on track. In November, it said it supported the idea of writing off debt for distressed households.