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Croatia’s FinMin says Fitch report underlines ability to deal with crisis

Croatian Finance Minister Zdravko Maric has said that Fitch Ratings' having affirmed Croatia's investment grade rating points to the country's ability to cope with the crisis in an appropriate way and suggests that economic recovery will be achieved without significant imbalances.

Zagreb, 5 December (Hina/MIA) — Croatian Finance Minister Zdravko Maric has said that Fitch Ratings’ having affirmed Croatia’s investment grade rating points to the country’s ability to cope with the crisis in an appropriate way and suggests that economic recovery will be achieved without significant imbalances.

Minister Maric made the statement at a news conference he held on Saturday following Fitch Ratings’ latest report on Croatia. It affirmed the country’s investment grade BBB- rating, assessing the outlook as stable.

The agency also forecasts that the economy will contract around 9% this year, and according to government projections, the contraction will be around 8%, the minister added.

Fitch expects full economic recovery in late 2022 while the government sees 2021 already as the year that will see stronger growth, Maric said.

As for fiscal indicators, Maric said that Fitch’s report was in line with the government’s projections, with the agency expecting the budget deficit to be slightly more than 3% of GDP in 2021, while the government expected a 2.9% deficit.

The minister also pointed to matching projections of the decline of the public debt to GDP ratio.

He said that the report showed the importance of good balance between job-preservation and the continuation of fiscal consolidation and public finance stability.

Commenting on Fitch’s positive assessment of Croatia’s accession to the Exchange Rate Mechanism II and its journey towards euro adoption, he repeated the agency’s view that the introduction of the euro would help raise the country’s rating by at least two notches.

Maric agrees with Fitch that Croatia should do its best to improve the absorption of EU funds.

He noted that a better credit rating meant lower borrowing costs and that many good investors considered an investment grade rating a necessary precondition for investment.

The minister cited as an example a €2 billion government bond issued on the international market at the start of the pandemic, with subscribers being leading global investors.

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