This is good news, says the Finance Minister reacting to Fitch’s decision to keep Croatia’s credit rating two notches below the investment level.
Finance Minister Zdravko Marić said that it was good news that Fitch had decided to confirm the previous long-term credit rating of Croatia in foreign and local currency at BB and the short-term credit rating at B, while maintaining a negative outlook for both, reports Večernji List on July 31, 2016.
“Taking into account all the circumstances in recent weeks, this is certainly good news,” said Marić. He pointed out that Fitch in the last four years had lowered the credit rating of Croatia two times, to two notches below investment level. “The important message is why they have decided to keep the credit rating this time. Despite certain elements of political instability, all the economic indicators are going in the right direction, especially indicators of public finances, budget and public debt”, said Marić.
“They are clearly saying that we should continue with the measures that we have started, especially in the area of public finances, continue to reduce public debt, carry out reforms, and then we can expect that Croatian credit rating will improve. That is the most important issue for us, since it would affect the interest rates”, said Marić.
The Minister added that HDZ’s proposal for the VAT rate to be lowered to 24 percent was realistic. “We have already said that when we presented the budget for 2016, and I have recently presented the budget results for the first six months. Spending is fully under control, revenues have increased by almost 10 percent, budget deficit has been reduced. These are necessary prerequisites for the reduction of VAT”, added Marić. He said that he personally believed that the Croatian economy and society as a whole badly needed tax relief, both in the field of indirect taxes, which is VAT, as well as in the area of direct taxes, especially income and corporate taxes.
Marić is confident that the results of the “stress test” of 51 banks in the EU, which showed that in the case of shocks it could be necessary to recapitalize certain banks in Italy and Ireland, should not be a problem from Croatian banking system. “Despite the fact that these are mostly banks from the Eurozone, I think that our banking system is stable. The high capitalization of our banks, which is almost twice as high as the European average, and good liquidity of the banking system are an additional argument and reason why we should not be very concerned”, said Marić.
