The Fitch Ratings agency yesterday upgraded Croatia’s rating to BBB, the best in Croatia’s history, with a positive outlook.
Marić said the rating was first of all closely related to debt price and the capital price for the state and, directly or indirectly, for the interest paid by businesses and citizens.
The Fitch rating has a positive effect on those processes, he said, but added that the upgrade should be viewed in continuity, recalling that until not so long ago the state paid a considerable amount for interest.
In 2015, the budgetary expenditure for interest was HRK 12 billion, which at that time was almost the entire budget of the education ministry, whereas now that expenditure is HRK 4.5 billion lower.
“Interest used to be 5-6% and now it is about 1% on the ten-year bond,” said Marić, adding that the credit rating assessment was important both in times of low and in times of higher interest rates on capital markets.
“We are talking about reference interest rates,” he said, adding that the increased money offer in recent years led to a considerable drop in reference rates, but that the total interest paid by citizens, businesses and the state was a sum of the reference rate and the rate related to a specific country and to the risk premium.
“That’s where the rating strikes because Croatia can’t influence the trend of reference interest rates, but it can the risk premium it pays.”
Marić said Croatia had a stable growth, public finances in order, a clear prospect of entering the euro area, and political stability.
“Those are all elements which have an effect on rating improvement, which is then reflected in a better perception and reputation of a country like Croatia in the financial world, and in the end comes the effect on the risk premium,” he said. That is important both when reference interests are low and when they are high, he added.
The investment rating is very important, not just for debt and capital prices but also for capital availability, Marić said.
“The moment you are in the investment zone, you are interesting to many more good investors who can invest in securities,” he said, adding that international investors had restrictions and were often not allowed to invest in a country below the investment credit rating.
“That’s why it’s very good that that has changed for Croatia in terms of Fitch and Standard & Poor’s,” Marić said, adding that it was also important that Fitch had a positive outlook on Croatia. “That sort of indicates the direction the rating could take.”
He praised the media focus on the credit rating, saying that it was good that people became aware of how important it was to know how to manage public money well.
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