Plenković: S&P Recognized Our Efforts, We Are Aware of What Is Needed to Return to Investment Rating

The upgrade of Croatia’s rating by one notch by Standard & Poor’s was assessed by Prime Minister Andrej Plenković on Friday as very good news, particularly highlighting the extremely positive assessment of the tax reform and announcing the implementation of structural reforms.

Standard & Poor’s (S&P) raised Croatia’s rating on Friday from ‘BB’ to ‘BB+’, with stable outlooks, thanks to further reduction of public debt and improved fiscal position of the country due to the continued economic recovery.

>>>S&P Upgraded Croatia’s Rating, Assessing That the Government Is Making Progress in Addressing Structural Issues

– This is very good news, after Fitch, now the rating agency S&P has recognized our efforts, primarily through the responsible fiscal policy we are implementing, which has led to a surplus of the general government and further reduction of public debt, said the Prime Minister.

He emphasizes that S&P has rated the effects of the tax reform very positively, as well as the Government’s response to the situation in Agrokor, as it stated that it expects the restructuring of Agrokor to proceed smoothly.

S&P noted in its report that Croatia’s public debt fell below 80 percent of gross domestic product (GDP) at the end of 2017 and that last year Croatia achieved a surplus in the general government budget for the first time, thanks to stronger revenues than expected, partly due to cyclical factors, but also due to the tax reform.

>>>For the First Time Since 2004: Fitch Increased Croatia’s Rating to ‘BB+’ with Stable Outlooks

With this move, S&P followed Fitch’s decision, which in January raised Croatia’s credit rating by one notch, marking the first increase in Croatia’s rating since 2004. Of the three leading global rating agencies, S&P and Fitch now hold Croatia’s rating one notch below investment grade.

– Of course, we are now one step below the investment rating and we are aware of what needs to be done to return to the investment rating, which is the implementation of those structural reforms that will contribute to the long-term sustainability of public finances and increase the potential growth of the economy, said the Prime Minister.

These are the Government’s goals in the economic plan, and detailed measures with implementation deadlines will be presented in this year’s National Reform Program, concluded Plenković.