ZAGREB: Standard & Poor's on Friday affirmed its rating for Croatia but revised its outlook from stable to negative, warning of a possible deterioration in the finances of the European Union's newest member.
"We are affirming our 'BB+/B' long- and short-term foreign and local currency sovereign credit ratings on Croatia," the credit rating agency said in a statement.
"We are revising our outlook on Croatia to negative from stable, reflecting our view that the ratings could come under downward pressure over the next year if gross domestic product ( GDP) underperforms our expectation for a mild recovery in 2014, fiscal deficits widen, or external financing becomes more challenging," it added.
S&P forecast a 1.0 percent contraction for 2013. It estimated economic benefits of Croatia's entry into the European Union on July 1 "will be limited by structural challenges, political constraints to fiscal reforms, leveraged public- and private-sector balance sheets, and an unfavourable external environment."
Finance Minister Slavko Linic later said it was a "message to the government to speed up reforms, boost process to restructure public firms and turn them towards investments."
Croatia's centre-left government has recently moved to privatise its last state-owned bank, the main insurer and loss-making freight rail company to fill a budget gap and restrain adding to a public debt that is nearing EU's threshold of 60 percent.
It also plans to lease operating of more than 1,000 kilometres (600 miles) of Croatia's highways for up to 50 years in order to repay loans taken for their construction.
Croatia's economy, oriented largely on tourism to its stretch of Adriatic coast, has been either in recession or stagnating for the past four years.
International financial institutions repeatedly warn that the country of 4.2 million should improve the overall business climate, increase competitiveness as well as reform its huge and inefficient public sector.
indiatimes.com
"We are affirming our 'BB+/B' long- and short-term foreign and local currency sovereign credit ratings on Croatia," the credit rating agency said in a statement.
"We are revising our outlook on Croatia to negative from stable, reflecting our view that the ratings could come under downward pressure over the next year if gross domestic product ( GDP) underperforms our expectation for a mild recovery in 2014, fiscal deficits widen, or external financing becomes more challenging," it added.
S&P forecast a 1.0 percent contraction for 2013. It estimated economic benefits of Croatia's entry into the European Union on July 1 "will be limited by structural challenges, political constraints to fiscal reforms, leveraged public- and private-sector balance sheets, and an unfavourable external environment."
Finance Minister Slavko Linic later said it was a "message to the government to speed up reforms, boost process to restructure public firms and turn them towards investments."
Croatia's centre-left government has recently moved to privatise its last state-owned bank, the main insurer and loss-making freight rail company to fill a budget gap and restrain adding to a public debt that is nearing EU's threshold of 60 percent.
It also plans to lease operating of more than 1,000 kilometres (600 miles) of Croatia's highways for up to 50 years in order to repay loans taken for their construction.
Croatia's economy, oriented largely on tourism to its stretch of Adriatic coast, has been either in recession or stagnating for the past four years.
International financial institutions repeatedly warn that the country of 4.2 million should improve the overall business climate, increase competitiveness as well as reform its huge and inefficient public sector.
indiatimes.com
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