Credit rating agency Fitch on Wednesday upgraded Croatia's rating to 'BBB+ from 'BBB', with a stable outlook, mainly because of Croatia's pending membership in the euro zone which is set to begin in January 2023.

Although the review of Fitch’s rating for Croatia was not due before late October, the rating was nevertheless changed three months earlier, because “developments in the country warrant such a deviation from the calendar.”

“Fitch believes that euro adoption is positive for the rating, as it would provide the sovereign with reserve-currency status, reduce transaction costs and limit exchange-rate risk to corporate and household balance sheets,” the agency said.

Croatia joined the Exchange Rate Mechanism (ERMII) in July 2020 and “has fulfilled all convergence and reform criteria within the shortest possible time-frame.”

Compared to Croatia, Fitch now assigns a lower credit rating to seven EU countries – Italy, Portugal, Greece, Cyprus, Hungary, Bulgaria, and Romania.