This is the first upgrade of Croatia’s credit rating since 2004.
The Fitch rating agency announced on Friday evening that it had upgraded Croatia’s credit rating to BB+ with a stable outlook, thanks to the growth of the economy, a strong tourist season and the improvement of public finances. This is the first upgrade of Croatia’s credit rating since 2004. At the time, Standard&Poor’s agency (S&P) increased the rating from BBB- to BBB, after which all three leading international agencies reduced the grade several times.
Fitch analysts pointed out that economic growth in 2017 amounted to three percent, with Croatia benefiting from a robust cyclical position, increased withdrawal of money from EU funds, a strong tourist season and tax reform. They quoted the improvement in public finances as one of their reasons for the upgrade, with the first general government budget surplus ever and with the target deficit of 1.3 percent of GDP.
Of the three leading rating agencies, Fitch now holds the Croatian rating one notch below the investment level, while S&P and Moody’s are two degrees below, with S&P setting the outlook as positive, which means that it would take only one step forward for the credit rating to be increased. Moody’s assesses that the outlook is stable.
Commenting on Fitch’s decision, Finance Minister Zdravko Marić said that the government’s goal was to return the country’s rating to the investment level as soon as possible and announced that the financial restructuring of the road sector should be completed in the first quarter of 2018.
“This is encouraging news for Croatia. We now have an obligation to continue with these results and all the measures we’ve put forward,” said Marić.
“Croatia is in good shape; we have a continuous surplus in the balance of payments. We’re now spending as much money as we earn, which means that we’re reducing public debt. For the second consecutive year, Croatia has seen a decline in the public debt to GDP ratio above expectations,” he concluded.
