Credit ratings have been changed for as many as 21 countries.
According to a report on Croatia, alongside economic indicators confirming the economic slump, "further details of the government"s ten-point economic plan have been emerging. This includes revisions to the state budget geared towards offsetting the shortfall in revenue caused by slower economic activity (the authorities are now aiming for a balanced budget, compared with an initial target of a deficit equivalent to 0.9% of GDP in 2009, but D&B believes this to be unrealistic in the current economic climate)."
The report reads that the authorities intend to increase the capital of the Croatian Bank for Reconstruction and Development (HBOR) by EUR400 million "to boost financing support for small and medium-sized enterprises (SMEs)."
"It is likely that the government will seek funding from the international financial institutions for this measure. The ability of the Croatian Agency for Small-Size Companies to guarantee loans will also be extended. In addition, support for the property sector will come in the form of subsidies on loans to first-time buyers, while the rules on industrial subsidies are also to be relaxed: for the next three years, maximum subsidies to businesses will rise from EUR200,000 to EUR500,000, without the need for permission by the Croatian Competition Agency."
"On the regulatory front, the authorities intend to cap the maximum time for obtaining licences at 45 days in order to encourage FDI (and for investments of EUR10m or more, the process should take no more than ten days). Meanwhile, the membership fee for the Croatian Chamber of Economy (which all companies registered with the Commercial Court must join) has been reduced by 25%."
The report also underlines that "In a bid to prevent liquidity problems in the private sector, the government has imposed a 60-day term limit on settling accounts payable by state-owned companies (which is broadly in line with the 30-60 days usual terms applied in the private sector)."
"The central government has also announced measures to lower the non-tax burden that local and regional governments impose on the economy."
"Finally, and somewhat worryingly from a country risk perspective, government officials say they intend to "strengthen the control" of imports. It is not yet clear what this will entail in practical terms, although officials have suggested that it could mean more rigorous quality inspections of imports. Any measures that impose additional burdens on exporters to the country would certainly lead to a downgrade in Croatia"s country risk rating if they were to emerge. Croatia"s risk rating is already on a deteriorating outlook, given the potential for financing difficulties later in the year, and D&B will be monitoring developments closely in the coming weeks."