From negative to stable: Moody's upgrades Croatia's outlook for the first time since 2007
The rating agency Moody’s changed Croatia's outlook from negative to stable and affirmed its Ba2 senior unsecured bond and Ba2 long-term issuer ratings.
This was Moody’s first upgrade of Croatia's credit rating since 2007. As Standard & Poor's upgraded its outlook on Croatia from negative to stable in mid-December and Fitch in January, Moody's is the third leading ratings agency that has upgraded its outlook on Croatia.
The upgrade is a product of Croatia's stronger medium-term economic growth following its emergence from the recession. Moody's also expects growth of around 2.5% on average over the next few years, which is a much lower growth rate than the pre-crisis average of 4.5% between 2000 and 2007 but is only slightly weaker than the average 2.8% expected for its Central and Eastern European peers over the same period.
As one of the Croatian government's main goals in its programme was improving the credit rating and returning it to investment level, the rating agencies recommend that the current favourable circumstances and trends should be used to continue with reforms, identifying that as a prerequisite for improving both Croatia's outlook and rating.
Considering that public finance stability is key for a better credit rating and a better position on the international financial market, the main emphasis of the government's economic policy will be on the further reduction of the public debt, based on fiscal consolidation, activation of state assets and the stimulation of economic growth.
Jelena Bilusic
Head of Relationship Management