Fitch Confirms Croatia’s Highest Credit Rating ‘BBB+’ with Positive Outlook

Fitch Ratings confirmed on Friday Croatia’s credit rating of ‘BBB+’ with a positive outlook, a rating supported by governance indicators and GDP per capita, along with membership in the EU and the Eurozone, the Ministry of Finance reported on Friday evening.

– We are pleased with the messages that Fitch has included in its report, where the importance of membership in the Eurozone is recognized, as well as achievements in terms of political, economic, and financial stability, the reduction of public debt as a percentage of GDP, and the implementation of reforms under the Recovery and Resilience Plan, which confirms the Government’s commitment to implementing reforms and improving institutional capacities – emphasized Finance Minister Marko Primorac.

He stated that fiscal policy in the upcoming period will be focused on strengthening fiscal sustainability while also considering social inclusion and enhancing the competitiveness and resilience of our economy.

– We will pay special attention to the permanent reduction of public debt as a percentage of GDP, below the threshold of 60 percent, and maintaining the budget deficit below the reference level of three percent of GDP. This will create conditions for further growth of Croatia’s credit rating to reach an A level for the first time, which is above-average credit quality – said Primorac.

Fitch notes that the positive outlook reflects Croatia’s resilience to recent external shocks, with high nominal GDP growth and prudent fiscal policy leading to a significant reduction in public debt measured as a percentage of GDP.

Additionally, Fitch determined that at the end of 2023, Croatia’s real GDP was nearly 16 percent higher compared to the pre-pandemic level in the fourth quarter of 2019.

They also estimate that economic growth in the period 2024-2025 should average 3.2 percent, while the Eurozone average is estimated at 1.1 percent. Fitch also expects further reductions in the public debt-to-GDP ratio in the coming years.

It is particularly noted that Croatia is among the most successful EU countries in drawing funds from the Recovery and Resilience Mechanism, and the rapid progress in implementing the reforms contained in the National Recovery and Resilience Plan has led to Croatia already receiving more than half of its total allocation of non-repayable funds.

Fitch further states that the implementation of EU-funded projects in combination with the implementation of structural reforms could stimulate the strengthening of potential growth and further accelerate economic convergence compared to the EU average, the Ministry of Finance announced.