18:21 / 16.07.2022.

Author: Branko Lozančić

Moody's raises Croatia's rating to investment category

Moody’s raises Croatia’s credit rating

Moody’s raises Croatia’s credit rating

Foto: Illustration / Shutterstock

The Moody's agency has raised Croatia's rating by two levels, to 'Baa2', including it in the investment category, with a stable outlook, due to the formal completion of the process of joining the Eurozone.

The EU Council for Financial and Economic Affairs adopted the final legal acts on July 12, the agency notes, improving the rating of Croatia's debt securities from 'Ba1' to 'Baa2' after analysis.

The rating 'Baa2' belongs to the investment category and indicates a moderate credit risk, and 'Ba1' to the speculative category, with an assessment of significant credit risk.

“Croatia will adopt the euro as its domestic currency on January 1, 2023, thereby eliminating foreign exchange risks for the government's public debt, largely denominated in euros, and reducing the risk to the liquidity of state finances,” Moody's points out.

The adoption of the euro will primarily reduce the share of public debt in local currency from the current more than 70 percent to almost zero, since the debt is almost entirely denominated in euros.

“This, in turn, will have a positive effect on Moody's assessment of the government's fiscal strength,” the agency emphasizes.

“The ability of Croatian institutions to conclude a rigorous adoption procedure within the planned period also supports Moody's assessment of the strength of Croatian institutions and management systems,” they add.

Source: HRT

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