Fitch Confirms Serbia’s Credit Rating at BB+

The credit rating agency Fitch Ratings confirmed Serbia’s credit rating at BB+, with a stable outlook for its further increase, in its report of March 19, 2021, the Ministry of Finance announces.

Serbian Finance Minister Sinisa Mali emphasized that the excellent economic results of Serbia, made in the period before and during the pandemic, had been recognized once again.

– This confirms that all the economic measures that Serbia took from the beginning of the coronavirus pandemic, as well as the previous fiscal consolidation measures, had been implemented successfully. Great shocks caused by the corona-crisis have been avoided, the jobs have been preserved, and the state continues to reduce the consequences to a minimum with its new economic measures – Mali claims.

Through joint efforts of the Government of Serbia and the National Bank of Serbia, as well as the adopted all-encompassing set of measures of monetary and fiscal policy, which, among others, includes a range of measures for supporting households, subsidies for salaries, a moratorium on loan repayment, a lowering of interest rates and measures for supporting liquidity in the corporate sector, the effects of the crisis have been substantially mitigated in Serbia, according to the agency’s report.

Minister Mali reminded that the Serbian economy persevered thanks to the provision of a total of over EUR 8 billion in 2020 and 2021 as support to the citizens and the economy and added that the implementation of the third economy stimulus package was in progress.

The implementation of the measures from the thorough support package for the economy and the citizens has maintained the employment rate in the economy, without an increase in the unemployment rate.

Fitch Ratings has also recognized that the implemented structural reforms have created conditions for a growth of the inflow of domestic and foreign direct investments.

– In the past years, Serbia has been a very attractive and desirable investment destination, which is also confirmed by the fact that FDI, despite the pandemic, amounted to nearly EUR 3 billion last year. No foreign investor gave up on its investments during the pandemic, which is a good confirmation of a favorable business environment – the finance minister said.

In its report, Fitch emphasizes that a low and stable inflation, a relative stability of the foreign exchange rate and a high level of FX reserves, which reached EUR 13.6 billion at the end of January 2021, have all been maintained.

Also, Fitch highlights the role of the banking sector in absorbing the shocks caused by the coronavirus pandemic. It is said that, due to the need to finance the measures of support in order to mitigate the impact of the crisis caused by COVID-19, there was an increase in the share of the debt in the GDP in 2020.

Fitch projects that the share of the general state debt will temporarily reach 59.6% of the GDP in 2021, and that the debt is expected to return to its downward trend as soon as 2022.

In the current year already, the agency expects the economy to recover and estimates that a considerable economic growth of as much as 5.2% in 2021 and 4.5% in 2022 will be achieved.

Minister Mali reminded that the corona-crisis was not over, but that, despite that, Serbia had ended 2020 with great results.

– It is also important to note that, despite the pandemic, we started off this year with excellent macroeconomic indicators – the public debt was at around 52%, below the Maastricht criteria, which is also a phenomenal result in the environment of general economic instability. In addition to the very low GDP drop last year, Serbia has every right to expect the cumulative growth in the upcoming years to be the biggest one on the Old Continent – he claims.

In the upcoming period, the Government of Serbia will continue taking all the necessary measures to preserve the hard-won financial stability and strong public finances and to ensure the biggest economic growth possible, which should increase the living standard, according to the press release.

Narodna banka Srbije Beograd

Ministarstvo finansija Republike Srbije

National Bank of Serbia

Ministry of Finance

Fitch Ratings

Sinisa Mali

stable inflation

stability of foreign exchange rate

FX reserves

GDP

share of debt in GDP

Maastricht criteria

public debt

credit rating of Serbia

direct investments