Moody's yesterday changed Croatia's outlook to stable from negative. This was its first upgrade of Croatia's credit rating since 2007. Moody's is the third leading ratings agency that has upgraded its outlook on Croatia. Standard & Poor's upgraded its outlook on Croatia from negative to stable in mid-December and Fitch in January.
This is a consequence of Croatia's stronger medium-term economic growth following its emergence from the recession and Moody's expects growth of around 2.5% on average in the coming years, the government said in a press release.
This is another message to the government that it is on the right track and shows that very unfavourable trends can be turned around in a short time, and the government has been aware since the beginning of its term that ordered and efficient public finances are the foundation of macroeconomic stability and economic growth, the press release said.
Therefore special attention has been given to stronger fiscal capacity and Croatia's fiscal viability through reductions of the budget deficit and the public debt, as a result of which the debt-to-GDP ratio has been reduced for the first time, which has been recognised and welcomed by all rating agencies, the press release said.
In line with these positive economic and fiscal trends, the government will pursue activities related to structural reforms in order to strengthen the long term potential of Croatia's economy, the press release said.
Since public finance stability is key for a better credit rating and a better position on the international financial market, the key emphasis of the government's economic policy will be on the further reduction of the public debt, based on fiscal consolidation, activation of state assets, and stimulation of economic growth, the press release said.
The rating agencies recommend that the current favourable circumstances and trends should be used to continue with reforms, identifying that as a prerequisite for improving both Croatia's outlook and rating, the press release said, adding that one of the government's main goals in its programme was improving the credit rating and returning it to investment level.
Text: Hina