CROATIA'S CREDIT RATING FOR OCTOBER UNCHANGED

ZAGREB, Oct 4 (Hina) - Croatia's risk profile for October remains unchanged - DB4d, the credit rating agency Dun&Bradstreet reported on Friday. #L# The country's risk indicators in September were marked by problems with the sea border to Slovenia, i.e. a deterioration in bilateral relations following incidents in Piran Bay. However, the latest agreement on the bay between the two countries is assessed as good for both countries, which is why the country's risk assessment for October did not change. The agency has been giving Croatia DB4d mark for a number of months, reads the report carried by the Zagreb business information agency BonLine. DB4d stands for countries of moderate investment risk, with significant risks regarding return on invested funds. An exceptionally favourable data for August is a moderate increase in retail prices, which rose by 1.2 percent compared to August 2001, and dropped by around 2.3 percent in relation to the month before. As a result, D&B has decided to lower its year-end inflation forecasts from 2.3 to 2 percent in 2002, and from 3 to 2.5 percent for 2003. The report notes that the low inflation is surprising, given surging domestic demand - retail sales increased by 11.4 percent in the first half of this year. This is attributed to imports, which in the this year's first seven months increased by 10.2 percent, while exports rose by 7.5 percent. The more important developments in September which affected Croatia's rating in October include the signing of a free trade agreement with Romania, which removed all obstacles to the country's admission to the Central European Free Trade Agreement (CEFTA). Heading D&B's list of Central and East European countries with the best credit rating (DB2d) are Hungary and Slovenia. They are followed by the Czech Republic, Poland and Estonia (DB3b). At the bottom of the scale are Yugoslavia, Uzbekistan, Turkmenistan, Tajikistan, Georgia, Belarus and Albania with DB6d credit rating. (hina) rml sb