Prime Minister Andrej Plenkovic said on Monday that the Fitch Ratings agency's decision to affirm Croatia's long-term foreign-currency issuer default rating (IDR) at BBB-, with a stable outlook, was a good signal and the result of the expected recovery in the post-COVID pandemic period.

Addressing his cabinet during an online meeting, Plenkovic, who is in self-isolation after testing positive for coronavirus on 28 November, said that the report on Croatia published by Fitch Ratings on Friday “is a very good signal and the consequence of the expected gradual recovery from the coronavirus pandemic, strong economic measures implemented by the government, and the country’s admission to the Exchange Rate Mechanism (ERM II), as well as maintaining economic activity despite demanding circumstances.”

The PM pointed to the credit rating agency’s message on the importance of political stability, the fast formation of the government after the July parliamentary elections, the budget adoption and the fifth round of the tax reform.

The Fitch report on Croatia reads that “parliamentary elections in July resulted in a favourable result for the ruling centre-right HDZ, which won 62 out of 151 seats and quickly received support from smaller parties to secure a new term. The HDZ rules in a minority position but thus far has obtained enough support to adopt legislation (such as the 2021 budget) without significant constraints. High level of political stability is reflected in Croatia´s strong governance indicators.”

“ESG – Governance: Croatia has an ESG Relevance Score (RS) of 5 for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns,” says Fitch.

“Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model. Croatia has a high WBGI ranking at 66.7 percentile, reflecting its track record of stable and peaceful political transitions, well established rights for participation in the political process, moderate institutional capacity, effective rule of law and a moderate level of corruption.”