S&P Global Ratings upgraded Croatia's long-term foreign- and local-currency sovereign credit ratings to BB+ from BB with stable outlook, citing the country's improved external position.

The rating agency affirmed the European nation's short-term foreign- and local-currency sovereign credit ratings at B and revised its transfer and convertibility assessment to BBB+ from BBB.

S&P cited the continued external deleveraging, recurring current account surpluses and strong increase in foreign currency reserves.

Croatia produced its first-ever general government surplus in 2017 at 0.6% of GDP, according to S&P's forecast. The rating agency said it expects Croatia to continue incurring small deficits averaging 0.8% of GDP through 2021.

S&P expects the general government debt ratio to fall below 80% of GDP in 2017. Although the level is still high, the rating agency said the ratio could drop another 10 percentage points by 2021 to just below 70% of GDP.

The country's strong current account surplus helped boost the central bank's foreign exchange reserves in 2017, which grew by $4.6 billion or 32% year over year, according to S&P.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.