Important credit rating for the price of capital for government, businesses and citizens


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ZAGREB, November 13, 2021 – Credit rating is important to the price of loans for government, businesses and citizens, as upgrading it reduces the risk premium, which has a favorable effect on the price of capital Finance Minister Zdravko Marić told Hina. Saturday.

The agency Fitch Ratings yesterday raised Croatia’s rating to BBB, the best in Croatia’s history, with a positive outlook.

Marić said that the rating was first and foremost closely related to the price of debt and the price of capital to the state and, directly or indirectly, to interest paid by businesses and citizens.

The Fitch rating has a positive effect on these processes, he said, but added that the upgrade should be seen as a continuation, recalling that until not too long ago, the State paid considerable interest.

In 2015, budgetary expenditure on interest was HRK 12 billion, which at the time represented almost the entire budget of the Ministry of Education, whereas today this expenditure is lower. of 4.5 billion HRK.

“Previously, the interest was 5-6% and it is now around 1% on the ten-year bond,” said Marić, adding that the assessment of the credit rating was important both in periods of low interest rates and periods of rising interest rates in the capital markets. .

“We are talking about benchmark interest rates,” he said, adding that the increase in the supply of money in recent years has led to a considerable drop in benchmark rates, but the total interest paid by citizens, businesses and the state was a sum of benchmark rates. rate and the rate linked to a specific country and the risk premium.

“This is where the rating hits because Croatia cannot influence the trend of benchmark interest rates, but it can pay the risk premium it pays.”

Marić said Croatia has stable growth, orderly public finances, a clear prospect of entering the eurozone and political stability.

“These are all elements that have an effect on the improvement of the rating, which then is reflected in a better perception and reputation of a country like Croatia in the financial world, and ultimately comes the effect on the risk premium, ”he said. This is important both when benchmark interest is low and when it is high, he added.

The investment rating is very important, not only for debt and capital prices, but also for the availability of capital, Marić said.

“By the time you are in the investment zone, you are attractive to a lot more good investors who can invest in securities,” he said, adding that international investors had restrictions and often weren’t. not allowed to invest in a country below the investment credit rating.

“That’s why it’s very good that it has changed for Croatia in terms of Fitch and Standard & Poor’s,” said Marić, adding that it was also important that Fitch had a positive outlook on Croatia. “It kind of indicates the direction the rating could take.”

He praised the media attention to credit score, saying it was good that people realized the importance of knowing how to manage public money well.

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