Serbia’s sovereign credit rating was affirmed at BB with a stable outlook by Standard and Poor’s as the Balkan country’s growth potential and steps toward European Union membership balance short-term risks.
“The stable outlook balances our view of Serbia’s monetary and external vulnerabilities against the country’s growth potential and improving policy environment,” S&P said today in a statement.
The rating, the credit assessor’s highest non-investment grade, may be lowered if Serbia’s external or fiscal liabilities were to increase “significantly,” according to the statement.
“We could also lower the ratings if we consider external liquidity is significantly worsening, such that the rollover rate of external debt would fall below 100 percent,” it said. “Conversely, we could raise the ratings if we consider the government has accelerated structural reforms of the public sector, the labor market, and/or the pension system.”
Serbia’s central bank cut its 2012 growth forecast to 0.5 percent from a previous estimate of 1.5 percent and a “more visible economic recovery is possible in 2013” which needs to be led by exports and investment, rather than consumption, Vice-Governor Bojan Markovic said on Feb. 13.
Serbia was declared a candidate for EU membership on March 1 and moves the country a step closer to beginning entry talks. The nation is the latest former Yugoslav republic to seek EU integration, joining Montenegro as an official candidate. Slovenia became part of the EU in 2004 and Croatia expects to be a member in July 2013.
Source businessweek
