Fitch rating agency: Victory of Students' List reduces political uncertainty in Serbia

The victory of the "Students' List" in Serbia's parliamentary elections reduces the political uncertainty associated with the election outcome. However, its governing agenda, including its economic program and policy priorities, remains unclear, stated the rating agency Fitch Ratings. In July, Fitch affirmed Serbia's credit rating at 'BB+' with a "Positive Outlook" and announced that a new credit rating assessment for Serbia is scheduled for November 20.

The agency emphasized that it would view developments positively if they "strengthened the conviction that the political transition would not undermine economic growth, macroeconomic stability, or external finances," reports Nedeljnik.rs.

– Progress in strengthening governance and institutions could also exert upward pressure on the rating. Conversely, heightened political uncertainty or policy slippage, which could harm economic growth, public finances, or external buffers, might lead to a revision of the outlook to “stable.” Continued growth in public debt would also have a negative impact on the rating – Fitch stated.

Referring to the election results, the rating agency assessed that the 141 parliamentary seats secured by the "Students' List" provide it with a strong mandate, following nearly two years of protests led by the group. The analysis also notes that the "Students' List" campaign focused on strengthening the rule of law, addressing allegations of corruption and enhancing media independence.

Its proposals, as highlighted, also include a review of major state projects and reforms to the electoral, judicial, educational and healthcare systems.

– However, progress in implementing this reform agenda could be hindered by challenges related to "governability," stemming from the movement's limited political experience, decentralized structure, ideological diversity and the high degree of politicization within state institutions – warned the agency Fitch.

Furthermore, it is believed that the "Students' List" foreign policy will "likely seek to strike a balance in relations with Russia, Europe, and China, given the country's significant economic ties, particularly in the energy sector, and the context of heightened geopolitical tensions."

A key question, however, remains what the economic policy of the "Students' List" will look like.

– Currently, there is little clarity regarding the movement's economic and fiscal policy priorities. Campaign promises remain broad and lack detail, though they do encompass support for domestic economic development, a fairer tax system and more predictable business conditions – Fitch noted in its analysis.

The movement has also called for stronger oversight of public investments and state contracts.

Students List

Fitch Ratings