First it was credit rating agency Standard & Poor’s, and now Moody’s have downgraded Croatia’s credit rating to junk, the worst status since 1997.
Moody’s announced in a statement today that a lack of budget discipline and stalled recovery were reasons for the downgrade.
“The government’s capacity to re-balance the economy toward exports is intrinsically limited. he country’s expected forthcoming EU accession in July 2013 is a positive development; however, the European environment and the government’s reform inertia are likely to limit the benefits normally expected to arise,” said the statement from Moody’s.
Croatia’s Minister of Finance Slavko Linic responded to the news saying that the decision would cause a re-balance of the budget, especially on the expenditure side.