ZAGREB, 19 March 2022 – Finance Minister Zdravko on Saturday welcomed the affirmation of Croatia’s credit rating by the Standard & Poor’s credit rating agency.
“In the present circumstances, this is very good news. The report is very positively worded,” Marić told a press conference.
Standard & Poor’s on Friday affirmed Croatia’s credit rating at ‘BBB-/A-3’ with a stable outlook, noting that the conflict in Ukraine might affect Croatia through weaker global demand, reduced tourism and inflation.
The agency expects the Croatian economy to grow at a stable pace in the next two years despite unfavourable inflation trends and the macroeconomic consequences of the war in Ukraine. The government is expected to remain committed to its reform programme, successfully absorb significant EU financing, and gradually rebuild the fiscal space it lost in the aftermath of the COVID-19 pandemic.
According to S&P, the Croatian economy is likely to expand at a rate of 3.7% in 2023 and 3.4% in 2024 and 2025. However, the growth forecast for this year has been revised down from 5.0% to 2.5% because of global geopolitical uncertainties following Russia’s military intervention in Ukraine and rising energy and commodity prices.
Marić said that over the next month the government would update the official macroeconomic projections for 2022, including projections for growth and inflation. S&P projected the inflation rate for this year at around 6%.
The growth forecast downgrade is also the consequence of last year’s growth, which was above all expectations, and uncertainties related to the direct and indirect effects of the Russian invasion of Ukraine, the finance minister said.
As for inflation, he said that it was expected to continue picking up in the first half of the year, while its movement in the second half would depend on geopolitical developments and energy and food price trends.
Eurozone entry is a positive risk
Marić said he was particularly glad that S&P had recognised the government’s efforts to improve the absorption of EU funding as well as its efforts regarding the EU’s Multiannual Financial Framework and the National Recovery and Resilience Plan.
He said that the implementation of the National Recovery and Resilience Plan was going very well, adding that everything envisaged under the plan had been fulfilled and that a new tranche of €700 million was expected in June.
S&P said that despite the complex inflationary context Croatia is on track for entry into the eurozone by 2023 and that the government, in line with euro adoption provisions, will reduce its fiscal deficit below the Maastricht reference level of 3% of GDP in 2023-2025.
Marić said that eurozone entry was a positive risk and would help increase the country’s credit rating. He said it was very important for the government to maintain its good standing and trust in international financial circles, even as regards the preparation of an international bond issue, adding that the S&P report also contributed to the government’s reputation.
Marić revealed that he had presented to S&P the government’s package of measures to mitigate the impact of inflationary pressures, worth nearly HRK 5 billion, including a VAT reduction from 13% to 5.0% for a wide range of food products, such as fresh meat, fish, fruit and vegetables.
Asked by the press if he expected further increases in retail prices, he said this was hard to predict, expressing hope that the VAT cut would alleviate further price increases. He noted that retail chains had begun lowering prices even before 1 April, when the government package goes into force, adding that this was good and that it indicated high competition in the retail sector.
Marić said he had met with executives from the 10 leading retail chains in the country. “They expressed their readiness to be as receptive as possible, but noted that they were not the only link in the chain, because there are suppliers as well.”
Commenting on media reports that people were increasingly buying certain items, such as cooking oil, Marić said that despite all concerns there was no need to stock up on food.
He said that the government was also working on measures concerning the inflow of Ukrainian refugees. They will be given both institutional and financial support, which will have certain repercussions for fiscal policy, he added.
According to the latest data, over 7,500 Ukrainians displaced by the war in their country have found refuge in Croatia.
Marić denies co-owner of Jadranka hotel group booked accommodation for him
Responding to questions from the press, Marić denied an article on the Net.hr news website that Krešimir Filipović, co-owner of the Jadranka Group, had book him accommodation for four days at the Bellevue Hotel, owned by Jadranka, in 2019.
“That was the first time I met Mr Filipović. I had not had any direct or indirect contact with him before that, nor are we in regular contact today,” Marić said.
He said that all the loans to this company from the Croatian Bank for Reconstruction and Development had been approved long before his term in office, adding that the company was duly meeting all its obligations in that regard.
Net.hr wrote about Jadranka following a complaint by Arsen Mujagić, a civil society activist from Mali Lošinj on the northern Adriatic island of Lošinj, according to which one of Jadranka’s owners is a fund owned by Russian citizens who have been placed under EU sanctions.
Marić said that the Register of Beneficial Owners is public, and that everyone who condemns the Russian aggression on Ukraine agrees that the enforcement of sanctions is inevitable.
Earlier in the day, the Finance Ministry said it was not true that there had been a change of ownership in Jadranka after the article on Net.hr.
On 18 August 2020, Predrag Perenčević and Krešimir Filipović were entered in the Register of Beneficial Owners as the beneficial owners of Jadranka d.d. and there have been no changes since, the Finance Ministry said in response to Net.hr.
The Ministry said that Marić had not stayed in a luxury or presidential suite, stressing that the minister had booked the accommodation himself and paid for it.
Responding to the question about its ownership and whether Russians still had stakes in the company, Jadranka said recently that there had been a change of ownership in 2014, when the Zagreb-based Beta Ulaganja company became a full owner of Jadranka Group.
“Croatian citizens Predrag Perenčević and Krešimir Filipović have continually been the ultimate owners of Jadranka Group. Their financial assets and investments are managed by the Investment and Asset Management Company through Beta Ulaganja d.o.o., as entered in the Court Register and the Register of Beneficial Owners,” Jadranka said then.