"The Long-term foreign and local currency ratings are affirmed at 'BBB-' (BBB minus) and 'BBB+' respectively. The Short-term rating is affirmed at 'F3', while the country ceiling is affirmed at BBB-' (BBB minus)," the agency said.
"The change in Outlook is driven by a combination of disappointing fiscal performance, limited structural reform implementation, and an increased risk in delays to the country's EU accession process," says Nick Eisinger, Fitch Analyst for Croatia.
Croatia's Finance Ministry has said that the change in Croatia's outlook for development was expected and stressed that Croatia was and is stable and that its rating has not been changed.
"Uncertainties have grown over Croatia's European Union (EU) accession talks, initially scheduled to commence in mid-March 2005, but now subject to delay, following an opinion from the International Criminal Tribunal for ex-Yugoslavia (ICTY) that Croatia is not cooperating sufficiently in handing over alleged war criminals," the agency said.
Fitch believes that the ICTY issue is likely to be resolved, possibly during the second half of this year, because of the importance of EU accession to Croatia.
"The return to a Stable Outlook is also du to worse-than-expected developments in public finances over the past two years," Fitch reported, among other things, in a lengthy report.
Fitch's rating definitions are available on the agency's public site, www.fitchratings.com.