Moody's plan to upgrade Croatia's rating proof of importance of euro area entry

The announcement of Moody's Investors Service's plan to upgrade Croatia's credit rating by two notches is the confirmation that joining the euro area will make Croatia's economy stronger and that it will help Croatia in times of crises, says Prime Minister Andrej Plenković.

Moody's Investors Service, one of the three leading international credit rating agencies, on Friday decided to place Croatia's Ba1 foreign- and domestic-currency long-term issuer ratings and foreign-currency senior unsecured ratings on review for upgrade.

The decision to place the ratings on review for upgrade of Croatia's ratings by two notches to Baa2 was triggered off by the recommendation of the EU Economic and Financial Affairs Council on 17 June proposing that Croatia adopt the euro as its domestic currency as of 1 January 2023.

Plenković twitted on Saturday that "this is a concrete confirmation that admission to the euro area will help us in the times of crisis and make our economy stronger."

The review period will allow Moody's to assess whether progress towards formalizing Croatia's euro area accession in EU law will be finalised by mid-July as currently expected. If these expectations are met, Moody's is likely to upgrade Croatia's ratings by two notches to Baa2, the agency says.

Text: Hina

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