Croatia

Following the successful second tranche of Croatia’s largest-ever bond issue, the government looks set to line up more next year to cover maturing debt and bridge its budget deficit. While the government has taken advantage of abundant liquidity that has pushed yields down, the country’s patchy macroeconomic condition may see the cost of issuing debt edge upwards in 2015. The economy has not grown since 2008, and with hotly-contested elections due next year, deep reform seems highly unlikely. Read more

Short of expectations for now but holding out hope for the future. That seems to be the best that can be said of Croatia’s first offshore oil and gas exploration tender, which closed for bidding this month.

Full results of the auctions, including the identity of the bidders, have yet to be made public, although the organisers said 15 of the 29 blocks on offer received bids. One person involved told beyondbrics they came from three bidders: INA, Croatia’s own national oil company; a consortium formed by OMV of Austria and Marathon Oil Corporation of the US; and a consortium of Eni of Italy, MedOil of the UK and a third unidentified company. Read more

Will there be any end to Croatia’s economic travails? The EU’s newest member state has not seen meaningful growth since 2008 and its GDP shrank again in the second quarter, by 0.8 per cent.

It was the eleventh consecutive quarter of contraction, indicative of a deep economic funk upon which EU accession last July has made barely a dent. In need of lasting structural reform, the economy is likely to limp to the end of the year in continued recession. Read more

A long-running dispute between Croatia and Mol, the Hungarian oil and gas company, over control of Ina, Mol’s Croatian counterpart, has flared up again.

Zagreb is seething over a statement issued by Mol after talks on Friday which said the latest round of negotiations had achieved precisely nothing. The ministry told beyondbrics the Mol statement was “a lie” and threatened to publish a recording of the negotiations unless Mol withdraws it. Read more

First quarter GDP figures from Croatia and Slovenia show that the former continues to slide backwards, albeit at a slower rate, while the latter continues its export-led recovery.

Croatia’s economy has not shown meaningful growth since 2008 and remains lumbered with structural problems that the government seems barely able to address. It shrank again in the first quarter, by 0.4 per cent, having contracted by 1.2 per cent in the last quarter of 2013. Read more

Croatia’s Adriatic coast is best known for its beautiful mountain scenery, clear blue sea and dozens of charming Venetian-influenced towns and cities. But the former Yugoslav country’s government hopes it will become equally well known for what may lie beneath those pristine waters – billions of dollars’ worth of oil and gas. Read more

By Ivo Josipović, President of the Republic of Croatia

Earlier this year, the EU put forward its new energy and climate goals for 2030. The new energy policy has since proved to be a deeply divisive topic between industry and climate advocates, and political leaders and EU technocrats.

An aspect of the EU’s energy future that has largely escaped mainstream discussion, though, is the divide between eastern and western EU member states. The crisis in Ukraine underscores the vulnerability of eastern EU states to energy supply disruptions and price increases that harm competitiveness and energy security throughout the region. The EU’s new energy policy needs to address the interests of its eastern members if it is to achieve its overall goals. Read more

By Guy Norton of bne in Zagreb

If there’s a subject guaranteed to provoke impassioned debate in Croatia, it’s golf. Millions of people around the world may regard the game as Scotland’s greatest gift to humanity after single-malt whisky, but in Croatia it’s more often seen as one of the darkest evils of global capitalism. Opponents of about 90 proposed golf course developments in the country are keen to characterise golf as the sport of choice for global property speculators willing to wreak long-term environmental damage on Croatia in pursuit of short-term profit. Read more

Six years of recession and government “inertia” are taking their toll on the EU’s newest member, according to Standard & Poor’s, which downgraded Croatia on Friday. The country’s long-term debt rating now stands at BB, lowering it further into non-investment grade. Hopes of an immediate departure from years of stalling on reform are dim – and it is scant reassurance that Croatia is not yet in fiscal crisis. Read more

Croatia’s accession to the European Union on July 1 may have been hugely significant for a country putting years of Communist dictatorship and subsequent war behind it. But its first three months of membership have been characterised by economic decline, rather than the hoped-for resurgence. And the immediate outlook is not much sunnier. Read more

By Tim Gosling of bne

Croatian Economy Minister Ivan Vrdoljak has reiterated his government’s desire to buy out Hungary’s Mol Group from local oil and gas firm Ina Group earlier this week – but is this just more rhetoric as the two sides looks to gain the upper hand in talks over operational control of the Croatian company? How long can the protracted battle drag on for? Read more

Just days before Serbia unveils its rebranded flag carrier in partnership with the UAE’s Etihad, Croatia has announced that it is seeking a strategic investor with ambitious plans for its own national airline. Where national carriers seemed to be dying off, killed by competition from budget carriers and western European rivals, there is now real hope of revival. Read more

Mol, the Hungarian oil and gas group, offered what appears to be an olive branch to Croatia on Thursday in the ongoing row over the control of Ina, the Zagreb-based refiner in which Mol owns just short of 50 per cent. Read more

Ouch. The investment grade party is definitely over for Croatia. Rating agency Fitch has downgraded it to BB+, putting it firmly into junk territory.

It’s more of a hiss than a pop: of the three main rating agencies, S&P already had the country on BB+ and Moody’s downgraded Croatian debt as to Ba1 (the equivalent to BB+) back in February. Read more

By Michael Glazer

A Zagreb court last week ruled that eight banks had mis-sold Swiss franc loans to retail clients. All foreign-owned, the banks make up more than 80 per cent of the Croatian banking industry.

The judgement – which is open to appeal – is fascinating in its many implications, not the least of which is the damages banks may have to pay. Read more