Fitch Ratings has affirmed Serbia’s long-term foreign-currency sovereign rating at BB+ with a positive outlook, leaving the country one notch below investment grade despite declining public debt, resilient foreign-exchange reserves and expectations of investment-led economic growth.
The rating maintains an important divergence among the major agencies. S&P Global Ratings upgraded Serbia to investment grade in October 2024, while Fitch continues to apply a sub-investment-grade classification and Moody’sretains a Ba2 rating.
That difference has practical financing consequences. Investors whose mandates permit decisions based on the highest available rating can already treat Serbia as an investment-grade sovereign. More conservative funds, bank credit committees and insurance companies may require investment-grade assessments from at least two agencies before adjusting their internal risk classifications.
Fitch expects Serbia’s general-government deficit to remain within the IMF-agreed ceiling of 3 per cent of GDP in 2026, following a deficit of 2.4 per cent in 2025. A recently announced support programme worth approximately 0.6 per cent of GDP is expected to be absorbed through stronger corporate income-tax, value-added-tax and non-tax revenue.
The positive outlook indicates that an upgrade remains possible. The main obstacles are no longer limited to conventional fiscal and external indicators. Political uncertainty, the possibility of early elections and the risk of weaker policy continuity now have greater influence on the rating trajectory.
For infrastructure and energy investment, the difference between BB+ and investment grade affects more than the government’s own bond yield. The sovereign premium feeds into the cost of borrowing for banks, public utilities, state-related enterprises and large projects whose revenues or contractual frameworks depend on government institutions.
This is particularly relevant for electricity-grid expansion, renewable integration, transport infrastructure and municipal investment. These sectors require long-tenor debt and often involve public guarantees, regulated tariffs or state-owned counterparties. A broader investment-grade consensus could improve access to institutional capital and reduce the country-risk premium applied by international lenders.
Serbia’s financing model remains strongly dependent on foreign direct investment, international banks, bilateral financing and state-supported infrastructure arrangements. Domestic capital markets are not yet deep enough to replace these sources. Ratings convergence would therefore have a disproportionately positive effect on the cost and availability of external capital.
The fiscal position remains manageable, but the next upgrade will depend increasingly on institutional predictability, project execution and the government’s ability to maintain policy continuity. Serbia has reached investment grade under one major methodology; achieving the same status more broadly requires the political risk premium to move closer to the improving macroeconomic indicators.
