Press release Fitch Ratings

Credit rating agency Fitch Ratings has left unchanged the Republic of Serbia long- and short-term foreign and local currency sovereign credit ratings at level ‘BB’. The outlook is stable.

Serbia’s ratings are supported by strong governance, human development and ease of doing business indicators, as well as a strengthened economic policy framework that has increased confidence that macroeconomic fundamentals have improved.

As estimated by the agency, headline fiscal indicators continue to improve. A large and stable tax base, combined with contained government expenditure, will support fiscal surpluses in 2018-2019 averaging 0.3% of GDP.

The main drivers of positive trend are further fiscal consolidation resulting in a reduction in the general government debt to GDP, continued reduction in net external debt and stable FDI inflow. This rating agency also assumes that the continued opening of chapters in EU accession talks and a new non-financing arrangement with the IMF (through a Policy Coordination Instrument) will serve an important anchor for maintaining fiscal and macro-economic stability.

Serbia’s BDP is projected to grow by 3.5% in 2018 and 3.3% in 2019. Investment and household consumption, supported by positive developments in the labour market, are expected to be the main drivers of growth for 2018-2019.

Fitch Ratings sees a stabilization in the net external debt ratio in 2018-2019. In both years, net inflows of FDI are projected to cover current account deficits forecast at 6.3% of GDP and 5.2% of GDP, respectively.