Finmin says revision of credit rating confirmation of government's good work

06 September 2012

Finmin says revision of credit rating confirmation of government's good work The Fitch Ratings revision of Croatia's outlook from negative to stable confirms that the Croatian government is doing a good job and expresses confidence in its plans, Croatian Finance Minister Slavko Linic said on Wednesday.

Fitch Ratings earlier today revised Croatia's outlook from negative to stable and affirmed its long-term foreign and local currency issuer default ratings at BBB- and BBB respectively.

"The revision means that the credit agencies' assessments of the government work in the first nine months are positive in the part referring to savings, income, tax reform and relieving the burden from the economy, as well as in the part clearly stating that we will finance part of the deficit by privatisation income," Linic said.

In the sea of bad news, given the economic fall and the fall of industrial activities, this is a sign that they still trust Croatia and those leading the country and that we can continue to fight in accordance with the government's plan, Linic said.

Linic said Fitch had awarded the government's plan to reduce exports. He said the government carried the burden of paying external debts, adding that the government's policy in the coming period was the implementation of fiscal responsibility.

"By this we will maintain our credit rating and abandoning this policy would mean a downgrade of the credit ratijng," Linic said.

He added that Prime Minister Zoran Milanovic insisted that this year's budget be executed according to the plan and that ministers who still have certain difficulties with exceeding the limits in paying out salaries would have to adjust their financial plan with the government's programme.

He said there would be no significant changes in the budget, adding that the economic drop remained a problem and that it is the result of the reduction of economic activities. The finance minister said that in the first six months of next year the government wanted to raise state investments in the energy sector, railways, water supply, waste management and waste-water management.

Asked about his expectations of other credit rating agencies, Linic said that after Fitch's report there should be no downgrade from anyone.

He also stressed that at this moment it was not necessary to refinance budgetary needs.

Linic praised trade unions and their efforts to reach an agreement with the government, adding that the government had a more difficult time with employers who declined their support.

Asked to comment on Fitch's remark that the Croatian government was expected to make some cuts in the public sector and whether that meant the reduction of salaries or layoffs, Linic said this primarily referred to restructuring, adding however that there would be some layoffs.

Salaries of those working in agencies and (punlic) companies will be reduced to the level of those in the public sector and the state administration, Linic said.