Fitch Ratings has maintained Serbia’s credit rating for long-term borrowing in domestic and foreign currency at BB +, with stable prospects for its further increase, the National Bank of Serbia announced tonight.
The Agency made such a decision thanks to good economic indicators of Serbia and having in mind the greater resilience of the Serbian economy as a result of responsible economic policy in previous years and adequate response to the crisis during the Covid-19 pandemic, the governor’s office said in a statement.
The Fitch Ratings agency points out that Serbia has more favorable macroeconomic trends in relation to comparable countries, partly thanks to the adopted extensive package of economic measures which contributes to a faster recovery of the economy from the shock caused by the pandemic, the statement added.
“The decision of the Fitch Ratings agency is another confirmation of the correctness of our firm determination to insist on preserving the full macroeconomic and financial stability of Serbia. The relative stability of the exchange rate, which we managed to provide despite the biggest challenge we have faced so far in the form of a Covid-19 virus pandemic, also plays a significant role in that regard,” said NBS Governor Jorgovanka Tabakovic.
The decision of Fitch Ratings emphasizes the credibility of Serbia’s economic policy, which was built in previous years, with the emphasis on maintaining low and stable inflation, increasing foreign exchange reserves and regulating public finances, the statement added.
In addition to maintaining low and stable inflation, relative exchange rate stability and increased foreign exchange reserves, the agency emphasizes the excellent indicators of the banking sector, primarily high capital adequacy and liquidity of banks, reducing the share of non-performing loans to 3.6 percent of total loans, deposit growth and double digits.
The statement states that Fitch Ratings estimates that the implemented package of economic measures has preserved jobs and production capacities, due to which the economic slowdown in Serbia in the conditions of a pandemic will be significantly less compared to comparable countries.
“Next year, Fitch Ratings expects a complete recovery of Serbia at a growth rate of 5.2 percent, and the continuation of high growth in 2022 at a rate of 4.8 percent. They also expect the continuity of low inflation, for which they project a movement at the level of about two percent in the next two years, as it was on average in the previous almost seven years,” it was stated from the office of the NBS governor.
According to Tabakovic, the package of monetary and fiscal measures adopted by the NBS in coordination with the Government of Serbia is yielding results, and most of the key indicators are well on their way to reaching the pre-crisis level.
“Serbia is one of the countries that reacted the fastest with a comprehensive package of measures, which we managed to prevent the decline of business and consumer confidence, and to preserve jobs and production capacities that are necessary for a quick economic recovery. This is shown by the inflow of foreign direct investments, which during seven months, despite the pandemic, amounted to 1.6 billion euros and the fact that in the first half of the year, in terms of GDP we had the best result in the region and one of the best results in Europe,” said Tabakovic.
For this year, Fitch Ratings projects a reduction of the current deficit, and the continuation of its full coverage of FDI inflows, which they expect in the coming period, and when it comes to public debt, the agency estimates that this year, despite extensive fiscal measures, it will remain below Maastricht levels of 60 percent.
“It is important that citizens and the economy know that we are taking all measures to further stimulate and accelerate economic growth and to carefully monitor all indicators in the domestic and international environment. In case of new shocks from the international environment, we are ready to react additionally in order to preserve macroeconomic and financial stability, as well as the domestic economy,” Tabakovic emphasized, Danas reports.
