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Euro adoption likely to boost Croatia's credit rating, fin min says

Author Annie Tsoneva
Euro adoption likely to boost Croatia's credit rating, fin min says Photo: Croatian central bank

ZAGREB (Croatia), September 13 (SeeNews) - The adoption of the euro is likely to help Croatia boost its credit rating to a “really safe” investment zone, deputy prime minister and finance minister Zdravko Maric said on Monday.

“Rating agency Fitch explicitly said in its latest report that euro adoption implies an improvement of the country's credit rating by two notches,” Maric said during a meeting of the national council for the introduction of the euro as official currency in Croatia, which was also attended by the EC vice president Valdis Dombrovskis. The meeting was recorded by the national broadcaster HRT and posted on the government's website.

Currently, Croatia has ”BBB–” ratings by Fitch and Standard & Poor's.

After posting a general government deficit of 7.4% in 2020 due to the impact of the pandemic, Croatia is expected to cut its general budget deficit from a projected 3.8% of GDP this year to 2.6% in 2022, to 1.9% in 2023 and to 1.5% in 2024, Maric said.

As a result of higher budget deficit, the public debt reached 88% of GDP in 2020. This year, the public debt is likely to fall by two percentage points to 86.6%, and is expected to be reduced by a further three percentage points in each of 2022 and 2023, to bring it to it 76.8% of GDP at the end of 2024, Maric also said.

During the same meeting, central bank governor Boris Vujcic said that Croatia's economy is recovering well and that its good results from the current tourism season would help it meet the Maastricht convergence criteria.

Croatia's annual economic growth stood at 16.1% in the second quarter of this year and is expected to be more then 5% this year, after an 8.4% contraction last year.

On Friday, the European Commission and euro area member states signed a memorandum of understanding with Croatia regulating the necessary preparations regarding the minting of euro coins.