Long-term foreign and local currency sovereign credit ratings on Serbia kept at BB

Fitch Ratings and Standard & Poor's rating agencies affirmed their ‘BB’ long-term foreign and local currency sovereign credit ratings on Serbia, with stable outlook.

As the National Bank of Serbia reports, in keeping the stable outlook, S&P was guided by “positive prospects of Serbia’s further economic growth and excellent fiscal indicators”.

The agency particularly underlined years-long preservation of price stability and significant improvement in Serbia’s external position, as well as increased resilience to external shocks, owing to strong exports growth. S&P estimates that inflation is likely to stay within the 3±1.5% target band in the medium-term and expects the current account deficit to remain at a sustainable level over the medium-run as well.

S&P estimates that the banking sector is adequately capitalized and has sufficient liquidity.

The NBS says that the agency highlighted the bank’s and Government's efforts on the reduction of NPLs, whose stock dropped by over 50% compared to where it stood before the beginning of implementation of the NPL Resolution Strategy.

The share of NPLs in total loans stood at 8.8% in April this year, the lowest level on record, the NBS reports.

As for Fitch Ratings, its decision to affirm a stable outlook was made based on the estimate that economic policy will continue to contribute to further improvement of the business environment and macroeconomic fundamentals.

Fitch also expects inflation to move within the target tolerance band of 3±1.5%, and, in addition to preservation of price stability, the agency highlights excellent trends in the banking sector and the results achieved in reducing NPLs.

It is estimated that, in the years to come, Serbia will record stable economic growth, driven primarily by rising investment and exports and labor market recovery, which will result in growth in final consumption.

The agency says that the main factors that could lead to a positive rating action include further acceleration of economic growth and its sustainability in the medium run, a reduction in external imbalances, preservation of the achieved fiscal results and further lowering of public debt.

Narodna banka Srbije Beograd

Fitch Ratings New York

Standard & Poor's New York

National Bank of Serbia

NBS

Fitch Ratings

Standard & Poors. public debt of Serbia

credit rating of Serbia

fiscal consolidation

budget deficit of Serbia

economic policy of Serbia

inflation of Serbia

GDP of Serbia