Zagreb gets highest-ever credit rating as S&P upgrades city to A-

Zagreb

Global ratings agency Standard & Poor’s has upgraded the City of Zagreb to an A- credit rating, the highest in the Croatian capital’s history.

The latest upgrade marks the fifth increase in Zagreb’s credit rating over the past five years, highlighting significant improvements in the city’s financial management and economic resilience, Grad Zagreb announced on Monday.

In comparison, Croatia’s national credit rating has risen by three levels during the same period.

According to Standard & Poor’s, Zagreb’s financial position has strengthened considerably over the past three years, with the agency expecting continued positive budgetary results. Financial performance in 2025 exceeded expectations, supported by steadily increasing liquidity.

The agency also highlighted improvements in financial governance under the leadership of Zagreb mayor Tomislav Tomašević. S&P noted stronger financial management, more efficient liquidity oversight, greater transparency and improved monitoring of city-owned companies.

Zagreb’s economic resilience was also cited as a key factor supporting the city’s credit profile. The capital generates more than one third of Croatia’s GDP and records above-average GDP per capita, underlining its central role in the country’s economy.

“This is the first time in history that the City of Zagreb has entered the ‘A’ class of credit ratings, demonstrating Standard & Poor’s confidence in our work, results and our ability to manage the city responsibly,” said Mayor Tomašević.

He added that strong financial results have enabled the city to avoid raising prices for many public services despite inflationary pressures. Unlike numerous other Croatian cities, Zagreb has not increased the cost of municipal services, kindergartens or elderly care homes, while public transport has even become cheaper and is now free for nearly 40% of residents.

S&P also highlighted Zagreb’s ambitious investment cycle, which includes major spending on public and road infrastructure, education, transport, sports facilities, housing and cultural projects, as well as improvements to the city’s communal systems.

Despite these investments, the agency expects the city’s debt levels to remain manageable. This is largely due to the use of European Union funding and favourable financing sources such as loans from the European Investment Bank.

At the same time, Zagreb’s strong liquidity position allows the city to meet its obligations and finance development projects without excessive borrowing. Increasing revenue from EU funds is also reducing the need for additional debt.

S&P concluded that despite wage increases for employees in city institutions and companies, as well as higher budget subsidies to keep public service prices stable, Zagreb’s overall fiscal position remains solid.

Further improvements in financial management and continued debt reduction could potentially lead to additional credit rating upgrades in the future, the agency noted.