The report, carried on Wednesday by the Zagreb-based agency BonLine, reads that under the PEP Croatia has agreed to cut the fiscal deficit to 3.7 percent of GDP in 2005 and to below three percent in 2007, in line with the Maastricht criteria. The government also plans to cut state subsidies, which now stand at between three and five percent of GDP and are above EU norms, reads the report.
Foreign debt, which reached around 80 percent at the end of last year, will remain at that level until 2006, when it should fall to 79 percent (which is still above the 60 percent level decreed by the Maastricht criteria) according to the PEP, D&B analysts say.
The government expects the current account deficit to fall from a planned 5.6 percent of GDP in 2004 to 3.8 percent by 2007.
The reports says that the government plans to keep inflation at low levels and the kuna stable and to complete the sale of most state assets by the end of 2005.
D&B analysts are sceptical that the government's fiscal targets can be met, but believe the government will make sufficient progress to win the EU's seal of approval and gain membership by 2009.
Commenting on events from the end of last year, the agency singles out a visit by an IMF delegation in early December, stating that it expected the visit to result in a positive report.
Croatia is placed 11th on the D&B's list of 25 transition countries, behind Bulgaria and Romania, whose credit rating is DB4c. All three countries are in a group of countries with moderate investment risk.
The list has been headed for quite some time by Slovenia, with the credit rating DB2c. Slovenia is followed by Hungary with DB2d.
In relation to the month before, D&B has improved the credit rating of Serbia and Montenegro (to DB6b) and Georgia (to DB6c), which has placed the two countries among countries with very high investment risk but a very high expected return.