Fitch increases Serbia's credit rating from B+ to BB-

The credit rating agency Fitch Ratings has increased Serbia's credit rating from B+ to BB-, with stable prospects for further improvement of the credit rating, announced the Ministry of Finance.

The main reasons for the improved rating are, as it was stated, the successful carrying out of the fiscal consolidation program, the projected economic growth rate in the following years and the projected budget deficit of 3% of the GDP for 2017. This will, the Ministry estimates, support the trend of lowering the public debt relative to the GDP.

As well, the governing of the state was highly rated, as were the degree of political stability and the efficiency of the Government of Serbia, the announcement says.

When it comes to economic indicators, the positive fiscal trends continued in the first few months of 2016, and Fitch Ratings reviewed down its projection of the 2016 deficit, from 4% to 3,3% of the GDP.

In 2015, Serbia recorded a real economic growth of 0,7%, based mostly on the increase in investments and net export, and the positive trends continued in the first quarter of 2016.

In 2016, in the first three months, an economic growth of 3,5 at the international level was recorded, which is the highest growth rate since 2013. The projection of the rate growth for 2016 has been reviewed up by Fitch Ratings, from 1.7% to 2.4%, the Ministry reports.

The rating agency points out the improvement of the balance of payments of Serbia as one of the reasons for the improvement of the credit rating. The deficit of the current account of the balance of payments was reduced in 2015 to 4.8% of the GDP, compared to 11.2% of the GDP from 2012.

The increase of the economy's export capacities, which is above all the result of the strong influx of foreign direct investments, has contributed considerably to the decrease in the deficit of the current account. The foreign direct investments fully covered the deficit of the current account of the balance of payments in 2015.

The improved credit rating, among other things, was contributed to by the official opening of chapters within the EU accession process. The banking sector was well capitalized.

- The strong dedication of the Government of Serbia to the carrying out of the reforms and three successful reviews of the IMF precautionary arrangement in 2015 were, too, important factors in Fitch's favorable credit rating of Serbia – the announcement says.