S&P press release

The rating agency Standard and Poors affirmed the credit rating of the Republic of Serbia at the level of BB, with the positive outlook for improving the credit rating.

According to the Standard and Poors the Serbian economy is likely to expand in 2018-2019 with average rates of 3% or higher, driven by stronger private sector consumption supported by expanding employment, wage growth, and a stable inflow of worker remittances. In the light of macroeconomic stabilization and higher investor confidence, higher inflow of FDI is also expected to boost economic growth.

The confirmation of the current credit rating of the Republic of Serbia by the Standard and Poor’s agency, reflects the expectation of the agency that the current Government will continue with the implementation of fiscal and structural reforms programs, and that the agency could raise its rating only if the government overperforms on its fiscal metrics while keeping the current account deficit in check.

Standard & Poor’s believes that the EU accession process as well as new policy-coordination arrangement with the IMF that the government is currently discussing could help to spur growth of Serbia’s private sector and ensure sustainable income convergence. The agency also estimates that the current account deficit, which amounted to 8.7% of GDP in the period from 2011 to 2014, will be on average at the level of 4% in the period 2018-2020. What will contribute the most are the existing FDI and the improved competitiveness of products and services.

The stable outlook balances the potential for a further improvement in Serbia’s external position and continued reduction of the public debt burden. Public finances are now at a more sustainable level, but the Agency considers that further public debt reduction is possible if current Government continues to implement reforms. One of the main goals in the upcoming period is to reduce the public debt below 50% of GDP.