Favourable ratings for Croatia and the Czech Republic

Thu, 15/03/2018

Several international rating agencies have published favourable assessments for Croatia and the Czech Republic                                                                                           


Fitch Ratings upgraded Croatia's credit rating from BB to BB+ with a stable outlook. At the same time, the excellent ratings for the Czech Republic, shortly after Standard & Poor’s, have been confirmed by Scope Ratings and Fitch.

For Croatia, this has been the first credit rating upgrade since 2004. The reason for this decision is the excellent tourism season and improvement of Croatia’s public finances. Out of the three major credit rating agencies, Fitch keeps Croatia's credit rating a notch below investment grade, whereas S&P and Moody's two notches below investment grade. In addition, S&P has assessed Croatia's outlook as positive, which means that one more step is needed for raising the country's rating by one notch, and Moody's has assessed the outlook as stable.

As far as the Czech Republic is concerned, Scope Ratings confirmed the long-term rating at AA with a stable outlook, the decisive factors being a well-diversified economy and a healthy public finance and banking system. It praised the current growth of the Czech economy with the balance of the general government sector expected to stay in surplus. The Agency also highlighted the prudent fiscal policy of the government, including the establishment of an independent National Budget Council, which is helping to reduce the already low level of national debt.

Fitch Ratings subsequently confirmed their A+ rating with positive outlook for long term obligations in both domestic as well as foreign currencies. Apart from healthy public finance, low level of debt and the overall growth of the economy, the Fitch Agency also praised the surplus of the state economy. The growth is seen to be driven mainly by higher household consumption, which benefits from increasing salaries and social support, together with decreasing taxes and solid employment growth. Like the Czech Ministry of Finance, Fitch is counting on the continuous reduction of Czech Republic’s debt.