“Croatia’s ratings balance strong structural features, including higher human development, governance indicators and GDP per capita than peers, with weak growth potential and high public sector debt”, Fitch said in a statement.

The positive outlook comes on the back of gradual progress towards euro accession and a continued marked reduction in gross general government debt thanks to sound fiscal policies, Fitch said.

The Croatian government is currently working towards completing the six agreed ERM II commitments by the second quarter of 2020, including the introduction of a comprehensive assessment by the European Central Bank of five local banks, Fitch Ratings added on December 6.