Deputy Prime Minister and Finance Minister Zdravko Marić (Photo: Patrik Macek/PIXSELL)
Foto: - / Pixsell
The Fitch Ratings Agency issued its report for Croatian on Friday, in which it affirmed Croatia's Long-Term Foreign-Currency Issuer Default Rating of "BBB minus" with a stable outlook. Fitch also raised its forecast for Croatia's economic growth in 2021 from 3.8 to 5.5%, and forecast that Croatia's public debt will drop by 6% year-on-year, down to 82.7% of GDP.
Commenting on the Fitch report on Sunday, Deputy Prime Minister and Finance Minister Zdravko Marić said it was a detailed, balanced and positive report: "Along with their decision to maintain Croatia's credit rating, I would place special emphasis on the report as a whole, because it is a very objective and well thought out report, specifically in the sense that it takes into consideration all of the circumstances, primarily economic, that can affect our rating. It points out which economic circumstances could drive the rating down, but also those that can drive it up."
Along with maintaining its position that Croatia should join the Eurozone in 2024. Minister Marić noted that the report links most of the negative risks to the epidemiological situation: "However, what makes me very happy is that the report puts a strong emphasis on a few key anchor points that we in government singled out as important in terms of pushing our rating higher. On the one hand that means our process for joining the Eurozone, which the report clearly states would effectively mean a jump of two steps higher, and I think this would put us in a very comfortable position. On the other hand there's the National Recovery and Resilience Program. And obviously the third segment deals with public finances."
Economic analyst Damir Novotny (Photo: Goran Stanzl/PIXSELL)
Foto: - / Pixsell
Meanwhile, Economic analyst Damir Novotny said that the reforms foreseen in the Recovery and Resilience Plan are the key to stimulating economic growth. Should the European Commission approve Croatia's plan, EU funds would begin to arrive by the end of the year.
"That is one of the most important drivers of growth and growth acceleration. To this we have to add the earthquake reconstruction programs in Zagreb and the devastated Banovina region, which can spur on growth in the construction sector," Novotny said.
One of Croatia's key economic branches is the tourism sector, which has come on hard times due to the coronavirus measures. Next week government is expected to decide whether or not it will prolong its financial assistance and job preservation measures. The president of the Association of Croatian Travel Agencies, Tomislav Fain: "Whether the measures are in the form of covering fixed expenses or non-refundable funding is effectively all the same to us. What is important to us is that this be agreed to as soon as possible, because we started negotiations in January and June is just around the corner and we still don't know where we stand. We won't be around to take tourists in if government doesn't act by next week."
Economic analyst Damir Novotny warned however, that government needs to reduce Croatia's dependence on the tourism sector: "I expect this tourist season to contribute to our economic recovery, but I emphasize that we cannot rely on tourism alone."
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