Standard & Poor’s rating agency has raised Croatia’s credit rating from BB-plus to BBB, ie the highest underinvestment rating in the lowest investment class, and the prospects have changed from positive to stable, the agency said. This is the first time since December 2012 that Croatia again has an investment rating that is no longer a “garbage”, with the other two agencies still having a rating below the investment.
“Croatian public debt is falling, with moderate economic growth, Macroeconomic risks associated with Agrokor have been reduced, and additional fiscal costs linked to Uljanik are likely to be low. The government conducts fiscal consolidation, the state budget is in primary surplus and we can rise again within two to three years if it turns out that Croatian economic growth is resistant to the European cyclical slowdown and if structural obstacles are removed, “S&P analyzes, with the added that the main risk of possible rating decrease is related to possible higher budget costs, which, as far as possible, also alludes to the settlement of the situation around Uljanik.
However, Croatia with rating BBB still stands convincingly worst than all the new member states from Central and Eastern Europe, with Romania. Also, the BBB’s “winning” rating is nothing more than return back in 1997, the year when Croatia first requested and received a credit rating from the same agency.
At the same time, savings on Croatian accounts were never higher, in 2018 it exceeded 200 bn. kuna, and it is growing faster than the issue of market credit.
One of the reasons is fear of new crises or unsustainable pension system, but the impression is that citizens are not inclined to invest in their country due to various negative experiences and high taxation.
State administrations should also analyze these indicators and offer better incentives to improve the overall investment climate and thereby open the way for greater foreign investment.