Moody’s revises Croatia view to positive

Moody’s Investors Service said it revised its outlook on Croatia to positive from stable and affirmed its Baa2 issuer and senior unsecured ratings.

“Moody's decision to change the outlook to positive is driven by an increasing likelihood that Croatia's debt burden will fall more significantly than previously expected leading to further improvements in fiscal strength. It is also supported by the prospect of a strengthening of Croatia's growth potential, as well as indications of improving institutional effectiveness, a governance consideration, not least through effective implementation of the very significant package of investments and reforms under Croatia's recovery and resilience plan (RRP) which supports Moody's assessment of Croatia's institutions and governance strength,” the agency said in a statement.

The agency said it forecasts Croatia's debt burden will decline to 61.1% of GDP by the end of 2023, and will continue to drop to 58.3% in 2024 and 56.3% in 2025. At the end of 2025, this would leave the government debt-to-GDP ratio almost 15 percentage points below its pre-pandemic level of 70.9% in 2019, and more than 30 points below its pandemic summit of 86.8% in 2020.

“The projected decline of the debt-to-GDP ratio remains significantly faster and deeper than Moody's previous expectations,” Moody’s said.

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