MARCH 6 2012 22:20h
This weekend was discouraging. Media lingered some new episodes of smoldering conflicts within Kukuriku coalition. Meanwhile, instead of dealing with serious internal brainstorming, leading SDP was attending a mediating session of some pop singer and the show was broadcasted live. At the same time, the British investment bank Barclays suggested their clients to get rid of Croatian bonds and to put away their money in some safer Baltic zone.
These depressing circumstances brought up the following question – does Milanovic’s government have enough inner strength, homogeneity and brains to stop Croatia downfall? Are Cacic and Linic, after all initial troubles and impalpable decisions on staff, competent enough to make some visible steps forward? Considering the fact that there is no alternative at the current political horizon, doubts in ability of today’s reign become more somber.
But after the Fitch rating agency announced that Croatia keeps the last grade the state had and that the Croatian bonds won’t be thrown away into a ‘’trash’’ category, perception is changing. This decision has helped the Government to gain some sort of certificate about quality of its economy policy and credibility of leading ministers. Cacic, Linic, Grcic and other Croatian interlocutors of Fitch analysts, have obvious left an impression of politicians who know what they want and how to achieve things. They were persuasive.
Although it is still unknown what the grades of agencies Moody’s and Standard&Poor's will be, Fitch’s decision brought in relief on political and economy plan. The large part of the Government’s policy was directed towards returning trust in national economy and waking up enterprise optimism. If Croatian bonds were named as ‘’trash’’, like jargon of financial market calls bonds that are supposed to be left untouched, the government would be having more difficulties in initiating changes and Croatian citizens would pay even more for that.
Already starting from April, the minister of finance is leaving for the States to sell new series of state bonds in order to gain around 1.5 million dollars. This amount isn’t big so politicians count that the rank would be initiated somehow even if the credit rating was decreased. But Linic’s job will be much easier in these circumstances and the price will be more favorable and all thanks to Fitch, as we could say, like people used to say ‘’Danke, Deutchland’’. Otherwise, if financial markets received information about new degradation of Croatian bonds, this thing would be more dramatic in any sense.
Catastrophe forecasters on duty announce that retention of the latest credit rating is still under condition. Fitch warns that Croatia must speed up reforms. The Government promised to alternate the Law on labor till the middle of this year, as it has to initiate the economy growth. Everything is true, but nothing happens overnight. Eventually the Government has got a required time-out. At least one of the difficult uncertainties was removed from the agenda and entrepreneurs, bankers and Croatian citizens will all have benefit from that relief. We can wail over the fact that it is terrible how financial markets directly rules states and national economies nowadays, but as long as things are that way, it is better to have them on our side than on the opponent side.