Croatia: Fitch Ratings affirms Croatia rating at ‘BBB-‘, with a stable outlook

Croatian Finance Minister Zdravko Maric said on Sunday that it was very good for Croatia that Fitch had confirmed its investment rating.

The latest Fitch Assessment Report affirmed Croatia’s rating at ‘BBB-‘, with a solid outlook, highlighting major short-term risks associated with the pandemic as well as the medium-term forecast for economic growth thanks to EU financial support, the HINA Agency reported.

Fitch also updated its forecast for Croatia’s economic growth in 2021 from 3.8% to 5.5%, forecasting that GDP growth will accelerate to 6.1% in 2022.

“This is very good news, which according to the credit rating agency Fitch in Croatia continues to be in the investment zone with a stable outlook,” Maric told the press.

He said he was pleased that the Fitch report objectively and well summarized all the key circumstances that influenced the assessment.

The emphasis of the credit agency is on the process of merging with the Economic and Monetary Union, he added.

“The report says what the introduction of the euro means for the credit rating. It meant a two-level jump up, which would bring us to a comfort zone. “On the other hand, there is the National Recovery and Sustainability Plan,” Maric said, adding that emphasis was placed on its implementation, which he expects to begin by the end of the year.

Public finances are the third segment and it is good that rating agencies underline that in this crisis fiscal stimulus should last as long as necessary in order to save jobs and people’s health, he said.

“When the pandemic is behind us, we will summarize the effects. When you look at all the deficits together, especially in the public debts of EU member states, including Croatia, the debts are not small. “

He said the effect of a year of pandemic in Croatia had offset four years when public debt was declining, by about three percentage points each year.

Last year Croatia’s public debt rose to over HRK 36 billion, largely due to pandemic fighting costs.

Fitch raised its public deficit forecast from 3.5 to 4% of GDP in 2021 and forecasts a decline to 3% in 2022, up 0.8 percentage points from the forecast made last December. Public debt / GDP should fall to 82.7% of GDP in 2022 from 88.7% in 2020, Fitch said, predicting Croatia’s entry into the Eurozone in 2024.

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