Fitch: Croatia sovereign ratings unaffected

Fitch Ratings said the decision by the European Union to delay the start of Croatia's EU Accession negotiations is a setback and could undermine Croatia's otherwise positive medium-term economic and credit outlook.

Croatia is rated long-term foreign currency BBB- and long-term local currency BBB+. The outlook is positive.

Fitch said the delay, due to insufficient efforts to hand over General Ante Gotovina to the International Criminal Tribunal for ex-Yugoslavia for alleged war crimes, is disappointing in terms of Croatia's EU accession agenda.

But S&P said the tone of the message from EU ministers is relatively conciliatory and strengthened cooperation leading to Gotovina's capture and trial would almost certainly enable accession talks to commence. No new date or deadline has been set, although there has been some speculation that the situation could be revisited in June or July this year.

Fitch said it believes the delay in accession negotiations will be temporary and hence does not have implications for Croatia's sovereign ratings. However, Fitch warns that the reaction and strategy that the Croatian government now adopts will be critical.

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