PM: Confidence of credit rating agencies shows Croatia is on right track

NEWS 07.05.2022 14:48
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Source: Ludovic MARIN / AFP

The confidence of international credit rating agencies shows that Croatia has remained on the right track after a strong economic recovery in 2021, Prime Minister Andrej Plenkovic said on Saturday.

His statement came after the Fitch Ratings agency reaffirmed Croatia’s investment rating at BBB with a positive outlook.

The government sees this as an indication of the country’s economic stability while dealing with the consequences of the Russian military invasion of Ukraine, inflationary pressures and other challenges.

The trend was reversed during the term of the present government. Fitch restored the credit rating to BB+ in January 2018 and to BBB- in June 2019. On 13 November 2021, the agency upgraded the rating for another notch to BBB with a positive growth outlook, the government said in a statement.

“The confidence of international credit rating agencies shows that, after a strong economic recovery in 2021, Croatia remains on the right track. We continue to stimulate growth by implementing structural reforms and further using EU funding,” Plenkovic said.

He noted that in all the crises so far the government had stood firmly behind the citizens, helping them with sets of measures to alleviate the impact of increased energy prices and inflationary pressures.

“Euro area membership next year will bring many benefits to the Croatian citizens and businesses while at the same time making the country more resilient to crises,” the prime minister said.

The government statement said that the positive outlook was based, among other things, on the assumption that Croatia will be in a position to adopt the euro as legal tender on 1 January 2023 given that it meets the criteria and reform measures under the ERMII mechanism. Fitch considers highly like a positive outcome for Croatia’s accession to the euro area this year.

Fitch projected Croatia’s growth rate for 2022 at 3.3%, which is more than the 3.0% forecast by the Ministry of Finance, and expects growth to pick up to 3.7% in 2023, which would spur investment as a result of the use of EU funding, the government said.

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