Prime Minister Andrej Plenkovic said on Saturday that the latest upgrade of Croatia's credit rating by Standard & Poor's was a historic achievement, reflecting the state of the national economy and society and recognising the government's reform efforts and results.

S&P Global Ratings on Friday raised its long-term foreign and local currency sovereign credit ratings on Croatia to ‘A-‘ from ‘BBB+’ with a positive outlook, noting that Croatia’s reform progress has further deepened its integration with its European and global partners, resulting in broader institutional improvements. The grade ‘A’ signals a strong capacity to meet financial obligations, with a certain degree of vulnerability to economic conditions and changes. S&P notes that the rating upgrade is mostly owing to positive economic indicators, fiscal consolidation, successful implementation of the National Recovery and Resilience Plan (NRRP) and political stability.

Plenkovic said today that in addition to the opening of the second tube of the Ucka Tunnel on Friday, yesterday’s Friday the 13th ended with more excellent news, a reference to the rating upgrade.

S&P representatives visited Croatia a few weeks ago, Plenkovic said, adding that they also met with him and were informed of the context of the new government’s term as well as future reform efforts and plans.

“That has resulted in their assessment, which is truly historic… This is the first time Croatia has been given an A grade by one of the three leading rating agencies,” Plenkovic said, adding that Croatia has achieved “an above-average quality of credit rating.”

He said that when viewed in an international context, about eight years ago Croatia was around 80th place in terms of credit rating while today it is among the first 45 countries.

“That is a serious improvement,” he said, adding that Croatia is now in the company of countries like Portugal, and that of the EU members, Cyprus, Romania, Italy, Bulgaria, Hungary and Greece have ratings that are below Croatia’s.

S&P has recognised the government’s reform measures, the continuation of structural reforms and the use of EU funds, including the NRRP, he said, adding that Croatia’s economy is forecast to grow by an average of 3% a year, twice the euro area average, in the period from 2024 to 2027.

Rating grew by five notches

Plenkovic said that in the international context, Croatia is the country that has seen its rating raised the most times in the shortest period.

He recalled that in 2015 the country had a speculative rating grade, adding that the rise of as many as five notches was owing to a responsible policy of public finance management, tax breaks, structural reforms as well as progress in integration processes.

“This is great news because for the country and its economy it means cheaper borrowing on markets and security for investors, which is good news also for all workers and pensioners. The improved rating is a lever making sure we can meet all of our financial obligations and plans in a good way. And that ultimately means lower interest rates,” he said.

The PM said that in less than four months into its new term, the government had delivered on one of its election promises, to have the country’s credit rating raised to an investment (A) category.

Speaking of positive macroeconomic indicators, Plenkovic said that GDP should exceed €84 billion by the end of the year, recalling that it was €47 billion when he first took office.

He also pointed to major progress made by Croatia in terms of sustainable growth, noting that of 193 countries, the country was placed eighth, with only Finland, Sweden, Denmark, Germany, France, Austria and Norway being ahead.

Answering reporters’ questions, Plenkovic also commented on the planned new round of tax reform, saying that it would again include tax breaks and that the government believes that it can lower the highest income tax rates.

On internal elections in SDP

Asked about internal elections in the opposition Social Democratic Party (SDP), taking place today, and which of the candidates running for SDP president he would like to see as the new party leader, Plenkovic said, “Just as we do not comment on internal elections in parties that are partners in the parliamentary majority so we do not comment on internal elections in opposition parties.”

“That’s for the SDP membership to decide. That will be the fourth leader of the SDP since I was elected the president of the HDZ,” said Plenkovic.

Asked which of the SDP candidates he believed he would have the most interesting parliamentary debates with, Plenković said that he was ready for any debate. “As the saying goes, I was born ready.”