The agreement was signed by Minister Alen Ružić and Mostar Mayor Mario Kordić.
Ružić said the one-off funding was provided in line with Croatia's constitutional obligations to help overcome difficulties and ensure continued access to kindergartens for all children in Mostar.
"We support Croats living outside Croatia, as well as the quality growth and development of children in line with high pedagogical standards and families in healthy employment relationships," he said, noting that Croatia had provided project funding for a kindergarten being built in the suburb of Rodoč. It is the first such facility to be built in Mostar in peacetime, he said.
Kordić praised cooperation with the Croatian government and Prime Minister Andrej Plenković, calling the project one of the most important in Mostar and Bosnia and Herzegovina to be funded or co-funded through programmes supporting Croats in BiH.
The facility is planned to accommodate about 250 children and staff and meet all required standards, representing a turning point, Kordić said. He added that there were six projects of particular importance to Croats in BiH, including the University of Mostar, and that the funding was being used with great care. Croatia had proved to be a sincere friend of BiH on its path towards the EU and NATO, he said.
Responding to questions, Ružić said funding was awarded while monitoring projects' results and their impact on the community. A range of projects included support for people with disabilities and children with developmental difficulties, as well as care for older people, in line with integration needs in Herzegovina, central Bosnia and parts of Posavina Canton (northern Bosnia).
"We support Croats in Vojvodina and Romania in the same way," Ružić added, saying plans were in place to visit them during the winter.