Tuesday, 21 May 2024
Croatia's Credit Rating Confirmed by Fitch with Positive Outlook Canva

Croatia's Credit Rating Confirmed by Fitch with Positive Outlook

Written by  Apr 06, 2024

In an announcement on Friday, the Fitch agency confirmed Croatia's credit rating as 'BBB+' with a positive outlook. This affirmation, as reported by the Ministry of Finance, is supported by indicators of effective management, GDP per capita, and Croatia's membership in both the EU and the eurozone.

Finance Minister Marko Primorac expressed satisfaction with the Fitch agency's assessment, highlighting the acknowledgment of Croatia's significance within the European area. The report recognized Croatia's achievements in political, economic, and financial stability, coupled with a reduction in the proportion of public debt relative to GDP. Additionally, the successful implementation of reforms outlined in the Recovery and Resilience Plan underscored the government's commitment to enhancing institutional capacities.

Looking ahead, Primorac outlined the government's fiscal policy focus on bolstering fiscal sustainability while ensuring social inclusivity and enhancing economic competitiveness and resilience. Special emphasis was placed on the goal of reducing the public debt-to-GDP ratio below 60 percent and maintaining the budget deficit below three percent of GDP, aiming to elevate Croatia's credit rating to the coveted 'A' level.

Fitch's positive outlook reflects Croatia's resilience to recent external shocks, with notable GDP growth and prudent fiscal policies leading to a substantial reduction in public debt. By the end of 2023, Croatia's real GDP had surged nearly 16 percent compared to pre-pandemic levels in 2019.

The agency forecasts continued economic growth for Croatia, averaging 3.2 percent in the period 2024-2025, surpassing the euro area average of 1.1 percent. Moreover, Fitch anticipates further decreases in the proportion of public debt relative to GDP in the years to come.

Highlighting Croatia's success in accessing funds from the Recovery and Resilience Mechanism, Fitch emphasizes the country's rapid progress in implementing reforms outlined in the National Recovery and Resilience Plan. Croatia has already received over half of its total allocation of non-refundable funds, positioning it among the most successful EU nations in this regard.

Fitch suggests that the implementation of EU-funded projects, alongside structural reforms, could catalyze growth, potentially outpacing the EU average and accelerating economic convergence. This assessment underscores Croatia's promising economic trajectory and its commitment to fiscal prudence and reform implementation, as articulated by the Ministry of Finance.

The Voice of Dubrovnik


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