– This is a complete failure of government policy. It is now urgent to conclude an arrangement with the IMF, and a plan needs to be made for both fiscal and monetary policy – assessed the downgrade of Croatia’s rating for Jutarnji list Željko Lovrinčević, an independent economist.
For him, the downgrade of the credit rating was expected, and according to his opinion, it was indicated by a number of reasons: from the government’s dismantling of the Fiscal Responsibility Act, which occurred when both expenditures and the deficit were increased in the budget for the next year, through the rise in tax pressure that stifles the economy, and the deepening economic chasm, to the cronyism in public enterprises.
– No serious reform has been initiated, and the incompetence of the government is becoming more pronounced. The consequences of this S&P decision will be catastrophic for Croatia – Lovrinčević warns.
Even in government circles, according to a source from Jutarnji list, they say they expected such a decision. This was already indicated by the recent actions of the rating agency Fitch, the second in the big rating triad, which recently changed our rating outlook to negative. On the other hand, S&P assesses the outlook for our rating as stable, which, by all accounts, we can thank for the imminent entry into the EU.
What the consequences of the rating downgrade will be for Croatia at this moment, no one dares to predict. What is certain is that the state will now borrow at a higher cost than before.
– Croatia will find it very difficult to access the international market in January after this, and will likely focus more on borrowing in the domestic market. Investors are already avoiding us at a wide berth – concludes Lovrinčević.
