Fitch Rating Agency Affirms Serbia’s Credit Rating at One Notch Below Investment Grade

The Fitch rating agency affirmed Serbia’s rating at BB+, with a stable outlook. Serbia is only one notch below investment grade despite pronounced uncertainties in the international environment, according to the website of the National Bank of Serbia (NBS).

In its report, Fitch emphasizes it made this decision owing to a credible economic policy framework in Serbia, particularly in light of:

– the importance of preserved exchange rate stability amid elevated geopolitical and other international risks,
– adequacy of fiscal policy, and
– a higher level of economic activity measured by GDP per capita compared to countries with the same credit rating.

Fitch also underlines the once again confirmed resilience of the banking sector, a high and adequate level of FX reserves, full coverage of the current account deficit with FDIs and preserved overall stability of balance of payments movements, which is particularly important in an environment of high global energy prices and overall risks emanating from the international environment.

As the agency notes, in late 2022 core inflation was lower than headline inflation by 5 bp, owing to the relatively stable dinar exchange rate against the euro and NBS’s adequate response. Three-year ahead inflation expectations of the financial and corporate sectors are anchored. The agency underlines that the country’s external position will improve, as a result of lesser energy needs owing to the built-up inventories and expectedly lower energy prices this compared to last year.

In regard to public finances, the agency underscores that the 2022 performance was better than planned, and estimates that, despite elevated outlays for energy purchases, in the next two years the fiscal deficit will be narrowed to 1.4% and general government public debt to 50.5% of GDP.

Narodna banka Srbije Beograd

National Bank of Serbia

Fitch rating agency

Jorgovanka Tabaković

credit rating of Serbia

credit rating BB plus

investment rating

foreign direct investments

inflation

core inflation

headline inflation