S&P Downgrades Croatia Currency Rating

Rating agency Standard & Poor’s has downgraded Croatia’s currency by one notch to BBB from BBB+, as financing from outside the country becomes increasingly difficult or expensive to come by.

The rating agency also cited on Monday the country’s lack of fiscal policy flexibility due to its large public sector. Its said that the outlook for the country’s currency was ”negative”, meaning that further downgrades may be possible. The BBB rating is two steps above so-called junk status.

The country has been hit hard by the global recession as many countries in the region are finding it increasingly difficult to the access the financing on which their economies depend.
Two weeks ago, Croatia’s government said it expected the country’s economy to contract 2 per cent this year instead if growing 2 per cent as previously predicted.

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