Press release Moody’s

Credit rating agency Moody’s has upgraded the Republic of Serbia Long-term foreign and local currency Issuer Default Ratings from ‘B1’ to ‘Ba3’. The Outlooks have been revised to stable.

According to this rating agency, main factors which contributed to the Republic of Serbia credit rating upgrade are successful implementation of fiscal consolidation measures, which halted the increase in its debt burden and recent structural reforms which have increased the resilience of Serbia’s economy, supporting potential growth.

Positive fiscal trends continued in 2016, with the general government deficit reaching an estimated 1.4% of GDP in 2016, far exceeding the 4% target in the original budget for 2016. Moody’s expects the deficit to decline moderately to 1.2% in 2017.

The Serbian economy recovered strongly in 2016, growing by an estimated 2.8% of GDP, the highest

rate of growth over the past 8 years. According to Moody’s, economic growth will rise to 3.0% this year and reach 3.3% in 2018, noting that the diversity of growth drivers together with improvements to price stability will support potential growth in Serbia of between 3.5%-4%.

This credit rating agency also asserts that the Serbian authorities have executed a highly successful fiscal consolidation which has led to a marked improvement in its 2016 fiscal performance, with the first primary budget surplus since 2005, supporting a fall in the general government debt to GDP ratio to 74% of GDP at the end of 2016 after years of increases. Serbia’s strong budget execution has been supported by improvements in revenue generation, with general government revenue as a share of GDP rising by 2 percentage points to 44%, the highest level since 2007 and above the median of Ba-rated peers.

The government’s strong commitment to reforms, the recent broad-based recovery in exports, achievements in maintaining the price stability and further opening of EU accession chapters are also factors which contributed the Republic of Serbia credit rating upgrade, according to Moody’s’ report.