ZAGREB, Aug 7 (Hina) - Croatia's credit rating for August remains DB4d, according to the Dun & Bradstreet (D&B) international credit rating company, Croatia's BonLine company reported Thursday.
ZAGREB, Aug 7 (Hina) - Croatia's credit rating for August remains
DB4d, according to the Dun & Bradstreet (D&B) international credit
rating company, Croatia's BonLine company reported Thursday. #L#
Positive indicators cited in the report include the GDP growth of
4.9 percent in the first quarter, which was influenced by a 4.9
percent rise in private consumption, and 15.1 percent higher
capital investments.
But high public consumption has caused a deterioration in Croatia's
external position. While exports increased by 5.1 percent in the
first five months, imports grew by 13.9 percent, and as a result,
the merchandise trade deficit widened by an appreciable 21.9
percent in comparison to the same period of last year, the report
says.
These are the main reasons why D&B analysts decided not to improve
Croatia's credit rating, although it would otherwise appear
warranted owing to recent domestic indicators, according to the
report.
D&B adds that the situation has been additionally aggravated by the
fact that domestic consumption was fuelled by a credit boom: in
April, foreign lending to Croatian banks increased by a sizeable
84.5 percent in relation to the same period in 2002.
Since many of these loans have been converted into domestic assets,
this could lead to changes in the kuna exchange rate. A weakening of
the kuna would increase the cost of foreign currency debt, thereby
threatening the quality of domestic banking assets and increasing
credit risk, the report says.
Considering the fact that Croatia's overall external debt
currently totals some 70 percent of GDP, further acquisition of
foreign credit will lead to increasingly burdensome future
repayments, while posing a growing threat to investor confidence,
D&B reports.
Positively, the Croatian National Bank's attempts to stem the
growth of domestic credit provisioning have yielded some early
results. Credit to the non-bank sector increased by 24.9 percent
year-on-year in May, down from 26.3 percent in April.
Croatia's credit rating "DB4d" indicates countries with a moderate
risk for investors, but with a significant risk for return on
investment. On the list of 25 countries in transition whose credit
rating is assessed, Croatia stands tenth.
At the top of the D&B list, with a DB2c rating, is Slovenia, followed
by Hungary with a credit rating of DB2d, marking them as countries
of low investor risk.
Serbia and Montenegro, Bosnia-Herzegovina, Uzbekhistan,
Turkmenistan, Tajikistan, Georgia, Belarus and Albania have been
at the bottom of the list for months with a DB6d rating, meaning they
are countries of very high risk for investors.
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