LONDON, June 3 (Hina) - The world's leading agency for the evaluation of credit ratings, London's Standard & Poor's, on Thursday confirmed Croatia's current credit rating of BBB- (triple B minus) for long term foreign currency loans.
Nevertheless, the agency has changed its evaluation of Croatia's outlooks for payment ability in the future, assessing it as negative instead of stable. The agency's financial analyst for Croatia, Konrad Reuss told Hina that the changed evaluation from stable to negative was intended as a "warning sing", that if economic problems "are not consistently resolved", in the next 10 to 12 months, Croatia's credit rating could be assessed as speculative. Reuss said that the agency had decided to change its evaluation of Croatia's outlook for payment ability despite the Croatian Government submitting a draft budget review. The budget will be in deficit which after the
LONDON, June 3 (Hina) - The world's leading agency for the
evaluation of credit ratings, London's Standard & Poor's, on
Thursday confirmed Croatia's current credit rating of BBB- (triple
B minus) for long term foreign currency loans.
Nevertheless, the agency has changed its evaluation of Croatia's
outlooks for payment ability in the future, assessing it as
negative instead of stable.
The agency's financial analyst for Croatia, Konrad Reuss told Hina
that the changed evaluation from stable to negative was intended as
a "warning sing", that if economic problems "are not consistently
resolved", in the next 10 to 12 months, Croatia's credit rating
could be assessed as speculative.
Reuss said that the agency had decided to change its evaluation of
Croatia's outlook for payment ability despite the Croatian
Government submitting a draft budget review.
The budget will be in deficit which after the privatisation of
Croatian Telecommunications and Croatia Insurance, will according
to estimates by the agency, amount to between 1.5 and 2 per cent of
the Gross Domestic Product.
Measures undertaken by the Croatian Government and the central bank
to date have been assessed by the agency as positive, Reuss said,
and this is the reason not to decrease Croatia's credit rating.
However, the "fiscal imbalance, lethargic income derived from
taxes and the increasing problems faced by the health and pension
funds, are anchoring the revival of the economy", notes the
agency.
The agency considers the key problem in the economy to be the high
level of debts in the business sector. The agency warns that the
high level of unemployment could crumble political consensus
regarding economic issues.
Standard & Poor's considers the restructuring and privatisation of
the banking system as positive and a "reasonable monetary policy",
resulting in a single digit inflation rate.
The agency further justified its negative evaluation of Croatia's
payment ability by the "increasing insecurity on the political
scene", preceding the Lower House elections.
The Kosovo crisis though has determined Croatia as "a significant
NATO, US and European Union ally", which has "opened opportunities
for the Croatian Government to improve its relations with the
international community", the agency believes.
Achievement of sensitive results in international relations "could
also help the ruling Croatian Democratic Union to renew its support
in the electoral corps", concluded Standard & Poor's.
(Hina) sp