Fitch keeps Serbia's credit rating at “BB-”

The rating agency Fitch has kept Serbia's credit rating for long-term local and foreign exchange loans at “BB-”, after improving it in June, than National Bank of Serbia reported.

According to Fitch Ratings, the stable outlook for further improvement of the country's credit rating is reflected in successful carrying out of fiscal consolidation and structural reforms, as well as Serbia's prospects for the EU membership, as confirmed by the opening of accession negotiation chapters.

Fitch Ratings estimates that the reduction of internal and external imbalance is continuing, thereby increasing Serbia's resistance to external shocks.

It is estimated, as the NBS reports, that the state's fiscal deficit will be slightly over 2% of the GDP, and around 1% of the GDP in the medium term, and that the current deficit of the balance of payments in 2016 will amount to around 4% of the GDP, keeping full coverage by foreign direct investments.

Serbia's thorough dedication to carrying out the three-year Precautionary Stand-By Arrangement with the IMF has also been positively assessed.

According to the agency, favorable macroeconomic trends are the result of, among other things, a low and stable inflation and the relative stability of the foreign exchange course. As for the growth of Serbia's GDP, the agency expects that it will reach 3% in 2017.

Regarding the banking sector, Fitch Ratings states that the amount of NPLs relative to the total number of loans is dropping and that the banking sector is highly capitalized and solvent.

The report also states that further decisions on Serbia's credit rating will depend of the perspective of the medium-term economic growth and further reduction of internal and external imbalance, the NBS says.

Fitch Ratings New York

Narodna banka Srbije Beograd

Međunarodni monetarni fond - MMF Beograd

Fitch Ratings

NBS

fiscal consolidation

fiscal deficit

Precautionary Stand By Arrangement with IMF

non performing loans

credit rating of Serbia

indebtedness of Serbia

NPLs relative to total loans