Credit Rating Upgrade Coming Sooner than Expected?

Total Croatia News

Good economic news continues.

It is clear that last year’s fiscal deficit was significantly lower than in the previous years. More accurate calculations will be known in April, but expectations are that, at the level of the general government, deficit decreased from 3.3 to 1.5 percent of GDP, according to this week’s analysis of Privredna Banka Zagreb. Finance Ministry did not want to speculate on final numbers, but they are convinced that the official data will show that last year, when interest payments are excluded, Croatia again had a primary surplus, reports on March 7, 2017.

At the level of the general government, primary surplus last year was more than two percent of GDP. Also, the Croatian National Bank has recently published its own data, which are calculated somewhat differently and, according to them, the budget deficit last year was 4.1 billion kuna or just 1.2 percent of GDP.

“It is important to note that 2016 was the second consecutive year with a primary surplus”, said the analysts, noting that last year it amounted to 6.2 billion kuna, or 1.8 percent of GDP, while the year before it was just 0.5 percent of GDP. Total state budget revenues grew by six percent, while expenditures increased by 1.5 percent. Tax revenues were 5.5 percent higher than in 2015, and the largest increase on the revenue side, by as much as 28 percent, was recorded in aids, which mainly means money coming from EU funds.

Finance Ministry did not want to comment on budget revenues and expenditures in the first two months of this year. They only said that the indicators were “as expected”. However, fiscal indicators have been a source of good news for some time. Analysts from Moody’s have certainly been informed about them, and whether the economic growth faster than expected will be enough to bring about upgrade in the credit rating outlook should be known soon. Their report is expected by the end of this week.

Upgrade of credit rating outlook would be beneficial because the Ministry will, by the end of this week, have to make certain decisions relating to this year’s first issue of bonds in international markets. Finance Minister Zdravko Marić said earlier that foreign bond debt due in the second half of April would be refinanced by the end of the first quarter.


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