It was upgraded by the Croats and the possibility of joining the eurozone was raised.

Fitch Ratings has upgraded Croatia’s sovereign debt rating, mainly on the grounds that Croatia will be able to join the eurozone in just over a year.

The international credit rating announced in London on Friday night that it had upgraded Croatia’s long-term sovereign foreign currency debt rating from the current BBB down to minus the current rating, leaving a positive outlook for the new rating.

In its explanation for the move, Fitch Ratings highlighted that it expects Croatia to be in a position to join the monetary union in January 2023.

Seget Donji aerial view on the waterfront, Trogir, Croatia, Dalmatia

According to the company, despite the shock of the coronavirus epidemic, Croatia has made significant progress in meeting the convergence criteria and structural reforms required for euro membership, and there is political support for Croatia’s accession to the eurozone.

Fitch also points out that Croatia may enter the eurozone sooner than expected, as the company has previously stated for sure by 2024.

Joining the euro will have a supportive effect on Croatia’s sovereign debt rating, as its adoption will give Croatia a currency of reserve currency, reduce household transaction costs and limit exchange rate risks on the corporate sector’s financial balance sheet, Fitch Ratingsen said.

Applies to the new, improved rating: The new, improved rating applies to the positive impact of the euro area on Croatia’s sovereign rating model, in particular through the flexibility resulting from the euro’s reserve currency status, which creates the opportunity for further upgrades.