Fitch Confirms Serbia's Rating, Stable Growth Outlook

The Fitch rating agency has confirmed in its report the credit rating of Serbia of BB+ and kept a stable outlook for its further increase, the Ministry of Finance of Serbia announced.

Fitch says in the report that Serbia's ratings are supported by its relatively good economic performance compared with rating peers, and a policy response that they expect to help generate a firm recovery from the pandemic shock.

– This is another confirmation that we have handled the coronavirus crisis in the right way. With our economic package of EUR 5.8 billion, which is 12.5% of our GDP, we are among the countries in Europe and the world that gave the most to companies compared to the size of their economy – said Serbian Finance Minister Sinisa Mali.

The report says that macroeconomic policy credibility built up over recent years, anchored by the IMF Policy Coordination Instrument (PCI), has resulted in low inflation, and higher FX buffers, and enhances confidence in a post-crisis fiscal adjustment.

According to the agency, Serbia's GDP is projected to grow 5.2% in 2021.

Fitch says that general government debt had fallen to 52.9% of GDP at end-2019 from 68.8% at end-2016. The report says that a temporary slight increase is expected in 2020, whereas, in the upcoming years, it is expected to start dropping again, reaching 51% by the end of 2024. The average maturity of central government debt has lengthened to 6.5 years from 5.1 years at end-2016.

The agency projects that FDI in the past period, despite a slight decrease in the first seven months of the current year, will be sufficient to cover the current account deficit. They project a pick-up to average 6.1% of GDP in 2021-2022.

Also, Fitch emphasizes that banks' sound credit metrics have helped the sector absorb the coronavirus shock – low inflation, exchange rate stability and FX reserve levels have been kept.

Mali concluded that the arrival of the DFC to Serbia was excellent news which would be taken into consideration by all three rating agencies in future rating.

Ministarstvo finansija Republike Srbije

Fitch Ratings

DFC

IMF

credit rating

credit rating of Serbia

BB plus

Sinisa Mali

GDP of Serbia

government debt of Serbia

direct investments

coronavirus

pandemic

FX reserves