The credit rating agency “Fitch Ratings” recently confirmed Serbia’s credit rating at BB+ level with stable prospects for its further increase. It is about the rating that Serbia reached towards the end of 2018. A higher level than the current one is BBB, i.e. investment rating, and experts say that although obtaining an investment rating is not expected to change the situation much, Serbia would get closer to the countries in the EU in terms of those parameters.
The Ministry of Finance said that reaching the investment rating depends on internal factors, but also on external factors, which Serbia has no influence on, but that it is still realistic to expect that it will be reached relatively quickly.
As key factors for the decision on Serbia’s credit rating, Fitch points out a credible overall economic policy framework, a higher level of economic activity measured by gross domestic product per capita, better governance and a higher level of human development compared to countries with a similar credit rating, and regulated public finances.
The director of the Economic Institute, Ivan Nikolić, said that from 2015 to 2018, Serbia advanced and came one step closer to the investment rating. Nikolić states that he expected that Serbia would receive an investment rating at the end of 2019 or the beginning of 2020, but that the problem was caused by a shock on the global level, first by the coronavirus pandemic, and later by the war in Ukraine.
The investment rating would create an opportunity for the inclusion of a new group of investors, and this would imply greater confidence in investing in Serbia. With a rating of BB+, Serbia is the closest to the investment zone, but it has been in that position for some time, always with the assessment that the outlook is positive.
Nikolić says that all EU countries are in the investment rating, and that Bulgaria, Croatia, Romania and Hungary are the worst. “But they are still there. When you line up the main macro-economic parameters and how we responded to the crisis challenges both during the pandemic and last year with the start of the war and currently with the prospects for the future in terms of growth, I don’t see that we are any different in relation to to Romania, Bulgaria and Croatia, but they see it differently,” said Nikolić.
Achieving the rating also depends on external factors over which Serbia has no influence
Based on numerous macroeconomic and political factors, as well as the internal and external environment and their comparison with other countries, credit agencies evaluate the credit rating.
The Ministry of Finance says that Serbia is actively working to achieve the best possible results in almost all the necessary segments, with a special focus on the most important ones such as economic growth, the share of debt in GDP, monetary policy and fiscal balance.
They add that reaching the investment rating depends on internal factors, but also on external factors, which Serbia has no influence on, and cannot be precisely specified. “Considering that it is about the next level, above the current one, it is realistic to expect that the investment rating will be reached relatively quickly,” the Ministry of Finance said.
