October the 7th, 2020 – The Croatian capital of Zagreb has seen its credit rating take what can only be described as a nosedive, so what’s next for the city which was dealing with not only a global pandemic but a major earthquake just a few months ago?
As Poslovni Dnevnik writes on the 6th of October, 2020, the fact that the position of the City of Zagreb is very bad has been highlighted by the collapse of its credit rating by one of the three largest world agencies. Namely, ten days ago, Standard & Poor’s lowered the Croatian capital city’s credit rating from BB down to BB- with an accompanying negative outlook, according to a report from Telegram.
In their explanation, Standard & Poor’s analysts point out that the reason for the downgrade is the expectation that the currently enfeebled Croatian capital’s indebtedness will increase significantly due to the costs of reconstruction which needs to be carried out in the wake of the earthquake which struck back in March this year. Namely, as it is known, the Law on Reconstruction envisages that Zagreb will need to participate in the costs of the reconstruction and restoration in the amount of 20 percent, which equals about 17 billion kuna in total.
“We have lowered our long-term credit rating for Zagreb given our view that contingent liabilities will increase significantly due to the new law under which the City is required to cover 20 percent of reconstruction costs from the March earthquake. According to current estimates, the cost that the Croatian capital should cover could exceed the city’s annual budget more than twice, although it [the necessary reconstruction works] would extend to more than a decade,” the report explained.
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