Plenković explains how citizens will feel the increase in the credit rating

Prime Minister Andrej Plenković said on Saturday that S&P's raising of Croatia's credit rating is a confirmation of the Government's reform efforts, as well as a clear signal to investors about the Government's direction of economic policy.

The credit rating agency Standard & Poor's (S&P) raised Croatia's investment credit rating from A- to "A" in its latest report published on Friday evening.

Prime Minister Andrej Plenković emphasized at a press conference at the government offices that this is the highest credit rating for Croatia in history, and that it represents a clear signal to investors about the government's economic policy direction and responsible management of public finances.

“Every step forward is a new signal for all those who want to do business and invest in Croatia. In this way, we can say that we are very satisfied with this report, which represents confirmation of our reform efforts. Of course, it is also an incentive for us to continue dedicated work on strengthening the Croatian economy and enabling its growth,” said Plenković.

He also said that Croatia is now on the "radar" of all serious investors, who know that they are coming to a well-organized country, with a strong legal system, a predictable tax system and an administration that efficiently and correctly handles requests.

According to Plenković, the agency's decision will primarily be reflected in more favorable borrowing by the state, and consequently by banks, the economy and citizens.

“This opens up a larger fiscal space, so that funds that would otherwise be allocated to servicing obligations can be earmarked for other important policies, such as employment and social policy. This is precisely why this kind of message also means concrete effects for our citizens,” said the Prime Minister.

He also said that the agency hereby confirms the direction of reforms in the Government program and in the National Recovery and Resilience Plan.

After joining Schengen and the Eurozone, he said, Croatia's new international step forward will be membership in the OECD.

"Strong effect of highly visible political stability"

“When all of this is added up, it is no wonder that the S&P analysts were looking at the basic premise that I have been saying for the tenth year and I will not stop repeating it, which is the strong effect of highly visible political stability that enables the continuity of reforms and is a prerequisite for any progress and any development leap. They see this very well and have evaluated the stability of the coalition very positively and the direction that we like The Croatian Democratic Union, together with our partners, is giving Croatia's development momentum,” said Plenković.

According to S&P, Croatia moved from a non-investment BB+ rating to an investment BBB- rating in March 2019, and has now reached level A.

Thus, Plenković pointed out, Croatia is the only country that has jumped six notches from the "junk" category in just seven years.

Also, according to the agency, ten EU countries currently have the same or lower rating than Croatia. Croatia is on the same level as Latvia and Lithuania, while Italy, Greece, Malta, Poland, Bulgaria, Cyprus, Hungary and Romania have lower ratings.

Plenković emphasized the policy of "catching up" with those countries that have been in the Union longer than Croatia, with a jump to 78 percent of the EU average when looking at GDP per capita, while absolute GDP is approaching 100 billion euros.

When looking at the report in more detail, he said, Croatia is reaching the European level in many aspects, including in the aforementioned context of "catching up".

But there is also a message that we should be careful when it comes to prices, especially in tourism and services.

“Reaching the European level is always good, however, on the other hand, we should take competitiveness into account,” said Plenković, answering a journalist's question whether this report might mean higher salaries for citizens, given the relatively high cost of living.

He also said that the government is once again in the "crisis management" phase, given that the wars in the Middle East are leading to an increase in energy prices.

“All interventions that we will make will ultimately be borne by the state budget. That is why it is important to have this kind of context in order to open up a fiscal space for crisis management. That is what I, given the vast experience we have, am very happy about at the moment,” said Plenković.

On the new weapons of the Serbian Army

Journalists also asked the Prime Minister to comment on Serbian President Aleksandar Vučić's statement that the Croatian state leadership and the Security Intelligence Agency participated the most and most directly in the student protests.

“I have not seen that statement, but it is a ridiculous thesis. We have no interest in dealing with Serbia's internal issues or being a puppet behind the scenes pulling strings and organizing protests. They have failed. Our goal is stability in the neighborhood, cooperation, resolving open issues, and protecting the rights of Croats in Serbia. I must dispel these theses,” the Prime Minister said.

When it comes to the new armament of the Serbian Army and informing NATO about it - he said that this is a normal process.

“It's normal communication. If you have a neighboring country that is not a member of NATO, that has a certain partnership with the Alliance, and at the same time has Russian planes with Chinese missiles on them, it is still something new in terms of security, and we think that it is good to take care of it at the level of the Alliance, and we will continue to talk to our partners about it and see what the meaning of such missiles is. These are not defensive missiles. They do not exist to shoot down another missile, but to hit targets on land from the air,” he said, adding that it is not anti-aircraft defense.

On the allegations against JANAF

After MOL and Slovnaft filed a new complaint with the European Commission against JANAF, claiming that the Croatian company is abusing prices, Prime Minister Andrej Plenković said that the allegations were unfounded.

He said that Hungarian officials had described it as secondary, unreliable and with expensive transport tariffs.

He stressed that Croatia had always communicated very calmly with Hungary, Slovakia and its partners in the European Union, and that this was now clearly confirmed in practice.

He said that Croatia, in addition to constantly offering alternatives, is also a friend, neighbor and partner who will not allow any of these countries to be left without energy in this situation. He stressed that the energy in this case is oil.

Speaking about capacities, he said that the question of the possibility of technical delivery had been constantly raised and that it had now been confirmed that JANAF could provide it.

He stated that the refinery in Hungary has an annual capacity of 8 million tons, and the refinery in Bratislava has 6 million tons, while JANAF can transport a total of 15 million tons of oil per year, which means more than 100 percent of the required capacity.

Plenković assessed that the credit rating was raised by the implemented reforms and investments (especially through the National Recovery and Resilience Plan), the upcoming accession to the OECD, as well as political stability and responsible management of public finances.

“This is also a clear signal to investors that Croatia is financially and economically stable and reliable,” Plenković emphasized earlier on the X network.

“A high investment credit rating is a strong incentive to continue policies that will raise the standard of living of Croatian citizens and enable Croatia to catch up with other EU members in development,” Plenković emphasized.

On Friday, the S&P agency raised Croatia's long-term foreign and domestic currency credit rating from A- to A, with a stable outlook.

According to the Agency's opinion, continuous reforms and investments, with the support of the EU instrument for recovery and resilience and the upcoming accession to the OECD, continue to strengthen economic resilience and long-term prospects for economic growth in Croatia.

Source: HRT