PM Plenkovic: Investors have recognised favourable trends in Croatia

Photo /Vijesti/2017/03 ožujak/14 ožujka/DSC_2283.JPG

PM Plenkovic said that investors had recognised favourable economic trends and messages of stability and seriousness, which had made it possible for Croatia to obtain favourable loans on the international market and resulted in an improved outlook regarding the country's credit rating.

Addressing a conference of the Croatian Chamber of Commerce on the business climate, Plenkovic said that favourable macroeconomic trends had made it easier for Finance Minister Zdravko Maric to seek loans on the international market.

Croatia on Monday agreed the sale of a EUR 1.25 billion 10-year bond on the international market, with a yield of 3.19% and a coupon of 3.0%, which is the most favourable borrowing to date.

"This bond will not increase public debt, and unlike bonds with a yield of more than 6%, this bond has a yield of 3.19%. That is a good and positive change," said Plenkovic.

The proceeds from the latest issue will be used to pay off US$ 1.5 billion worth of bonds in April, with a coupon of 6.25%, which represents a considerable saving in the budget for annual interest costs.

Plenkovic also commented on Moody's decision of last Friday to improve the outlook on Croatia from negative to stable, which is the first positive change in the rating agency's assessment of Croatia since 2007.

The outlook on Croatia was improved in recent months by Standard & Poor's and Fitch as well.

"Credit rating agencies are not skipping any steps. There are no such miraculous governments or circumstances. It is done step by step. If the world's three leading rating agencies say that the outlook is no longer negative but stable, it is a good message we should build on," said Plenkovic.

He said that the improved outlook was primarily a result of the work of Croatian business people, producers, exporters and those who were competitive in their field of activity.

Commenting on the consolidated government budget deficit for 2016, Plenkovic said that even though official statistics were not available yet, the deficit was below the planned 1.6% of GDP, namely at 1%.

He underlined the need to keep working on reducing public debt, whose share in GDP dropped for the first time in 2016, to 83.9%.

"... We will continue to manage public finances well and maintain fiscal discipline in line with the 2017 budget and the guidelines for 2018 and 2019," said Plenkovic.

Text: Hina