Croatia’s Credit Rating Upgrade Sparks Political Dispute

The news in Croatian

1. agencija  (f.)
   organizacija ili ured koji obavlja određene poslovne ili javne zadatke ↩︎
2. rejting  (m.)
   ocjena ili rang nečije kvalitete, pouzdanosti ili uspjeha ↩︎
3. guverner  (m.)
   čelni čovjek neke važne institucije, osobito središnje banke ili pokrajinske vlasti ↩︎
4. investitor  (m.)
   osoba ili tvrtka koja ulaže novac s ciljem da ostvari dobit ↩︎
5. zaduživanje  (n.)
   proces u kojem netko uzima posuđeni novac i obvezuje se vratiti ga uz određene uvjete ↩︎
6. napetost  (f.)
   stanje u kojem postoji sukob ili neslaganje pa se osjeća nervoza i nelagoda ↩︎

Translation

Text comprehension

Question 1: What does the governor of the Croatian National Bank say the higher credit rating shows, and what does he say Croatia must do?

Question 2: How does President Milanović’s opinion about the credit rating differ from the governor’s view?

Vocabulary

Croatian	English
agencija  (f.)	agency
rejting  (m.)	rating
guverner  (m.)	governor
investitor  (m.)	investor
zaduživanje  (n.)	borrowing / taking on debt
napetost  (f.)	tension

Read the full story

International agency Standard & Poor’s (S&P) has raised Croatia’s credit rating from A- to A, with a stable outlook, placing the country among states with some of the higher investment grades. The decision has triggered a wide political debate in Zagreb and has also been mentioned in a separate diplomatic dispute between Croatia and Serbia.

According to Boris Vujčić, governor of the Croatian National Bank (HNB), the upgrade is above all a sign of confidence in Croatia’s recent macroeconomic policy. Speaking after a student debate at the central bank, he said the move “cements trust” among investors and confirms forecasts of continued economic growth. Vujčić stressed that rating agencies consider Croatia to be on a “good path”, but warned that this alone is not enough.

The governor underlined the need to push ahead with structural reforms to support long‑term growth. These reforms, he said, have been discussed for many years, with some partially implemented and others still pending. He also highlighted the importance of keeping the fiscal position under control, an issue that ratings agencies also monitor closely. In his view, the improved rating should be seen as both recognition and a reminder that Croatia must continue reform efforts.

Croatia’s President Zoran Milanović, however, offered a far more sceptical interpretation. Commenting on the upgrade to journalists at a memorial chess tournament in Zagreb, he argued that credit ratings themselves are less important today than in the past. For some, he said, ratings will again become a “fetish”, but what truly matters is how a state borrows and at what interest rate.

Milanović pointed out that a country can, in theory, have a very high rating but still face relatively costly borrowing, while another with a lower rating could borrow more cheaply if market conditions allow. He recalled that in 2015–2016, when he was prime minister, interest rates on Croatian government debt were at historically low levels, even though the country’s rating was weaker than it is today. In his words, the current upgrade can serve as attractive “decor”, but does not automatically guarantee low borrowing costs.

The president also raised questions about Croatia’s reliance on European Union funds, especially money from the National Recovery and Resilience Plan (NPOO), which he described as a very generous financial “pump” for the current government. He warned that this inflow is temporary and will largely end in the near future. Milanović asked what will drive Croatia’s above‑average economic growth once this external funding slows, noting that many new EU members experienced a similar pattern of boosted growth while such funds were available.

Referring to projections published by the Ministry of Finance, he said that Croatia is expected to increase public borrowing around 2027. According to Milanović, even the lowest interest rates available then may be higher than those Croatia obtained when its rating was worse. He suggested that the government could expand borrowing and allow the general government deficit to widen in order to enter the 2028 election year with continued economic growth. These comments were presented as his political assessment rather than as an official fiscal forecast.

Milanović also compared the current situation with the period of his own government, saying it inherited what he called “refined junk” status in the ratings, and then moved the country towards a position of minimal budget deficit and a positive balance of payments. He described this as the maximum possible fiscal consolidation at the time, while noting that today Croatia’s external balance is again negative.

The debate over the rating upgrade coincides with broader political tensions in the region. At a strategic forum in Bled, Slovenia, Croatian prime minister Andrej Plenković commented on the prospects of further European Union enlargement by 2030. He expressed doubts, pointing to unresolved issues in several Western Balkan states. When speaking about Serbia, he referred to more than two years of protests and internal unrest there, describing the country as being “on the verge of civil war”.

The statement drew a strong reaction from Ana Brnabić, president of the Serbian National Assembly and former prime minister. Writing on the social network X, she rejected Plenković’s characterisation of Serbia, claiming that it was neither true nor likely. Brnabić argued that, in her view, some actors in Croatia would like to see Serbia in such a crisis because they allegedly see it as a way to remove President Aleksandar Vučić from power. She insisted that, to the “great happiness” of Serbia and most of its citizens, the country is not on the brink of civil war.

Brnabić also used a reference to a well‑known Serbian song to emphasise her view that attempts to destabilise Serbia would fail, and she made a brief, mocking remark directed at unnamed Croatian public figures. Her comments illustrate how assessments of internal stability and democratic protests inside Serbia have become part of a wider Croatia–Serbia political dispute, even in the context of discussions on EU enlargement and regional security.

Taken together, these developments show how Croatia’s recent economic indicators and improved credit rating are interpreted differently by key political actors: the central bank stresses investor confidence and the need for continued reforms, the president questions the practical impact on borrowing costs and future growth, and the prime minister links regional stability and democratic standards in neighbouring states to the EU’s enlargement agenda. At the same time, Serbia’s leadership firmly contests Croatian warnings about instability, underlining ongoing political sensitivities in the Western Balkans.

Info: ‘Croatian Learner News’ is a service from ‘Let’s Learn Croatian’, a language school dedicated to helping people learn to speak Croatian through various types of online Croatian courses. It provides information, explanations and resources that support learners at different stages of studying the Croatian language.