Serbia's credit rating BB- affirmed

The rating agency Standard & Poor's (S&P) has affirmed Serbia's long-term foreign and local sovereign credit rating at BB- with a negative outlook, the National Bank of Serbia (NBS) announced in a release on April 11.

According to the NBS release, the rating agency also left Serbia's short-term credit rating at B.

S&P explained that the outcome of March 16 parliamentary elections had created a more favorable political environment for the start of long-delayed fiscal consolidation and structural reforms, it was announced on the NBS website.

The release published on the NBS website reads that although the outlook is negative, Serbia's rating could remain stable at the current level if the reforms that the Government should adopt soon consolidate public finances in the long run, which would lead to a more favorable outlook for economic growth and sustainable external position of the country in the medium term.

As explained, the rating was affected by risks stemming from high fiscal and foreign deficit, moderate GDP per capita and the limited flexibility of monetary policy due to high eurization of the economy. The rating is backed by long-term potential of Serbia for economic growth. S&P believes that the Government would unleash that potential with the reform of the labor market, business environment and public administration, the NBS said in the release.