Credit rating company Moody’s has changed Croatia’s outlook from stable to positive, affirming the country’s long-term local and foreign currency issuer and senior unsecured debt credit rating at Ba2.
Although the surplus was lower (0.2 per cent of GDP), in large part due to the activation of a state guarantee regarding the Uljanik Shipyard, Croatia confirmed a positive trend throughout 2018.
In its statement, Moody’s highlighted how the improved fiscal performance is mainly attributable to a significant reduction in the structural deficit and that the set of measures contained in the new Fiscal Responsibility Act should strengthen the existing fiscal framework, bringing Croatia’s framework closer to the European standards.
Furthermore, in the medium-term, pension reform enacted in late 2018 will contribute to the fiscal sustainability of the system while ensuring better pension adequacy. The acceleration in the planned increase in the statutory retirement age to 67, coupled with the equalisation of retirement age for men and women, will support the decrease in public pension expenditure expected by the European Commission’s 2018 Ageing report.