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The Government of the Republic of Serbia

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Confirmation of Serbia’s credit rating proof of government’s responsible policy

Belgrade, 11 April 2023

The Ministry of Finance stated last night that S&P Global Ratings credit rating agency confirmed Serbia's credit rating at BB+ level, with stable prospects for its further increase.

The confirmation of the credit rating, in the current conditions of uncertainty in the international environment, is proof that the government of Serbia is responsibly facing the given challenges.

Although the scale of the economic crisis is large, as well as the negative effects resulting from it, Serbia managed to preserve macroeconomic and financial stability and maintain strong prospects for long-term growth.

The agency states that Serbia's credit rating could be improved if the growth of the Serbian economy accelerates beyond expectations, and the negative consequences of geopolitical uncertainty are kept under control.

S&P Global Ratings estimates that the economy of Serbia continued to grow at a solid pace in 2022, that the slowdown in 2023 will only be short-lived, and after that, a growth of three percent is expected in the period from 2024 to 2026, which will be stimulated by the improvement of global economic conditions, domestic investments and consumption.

The banking sector continued its successful operations, and the banks remained profitable and solvent. The level of non-performing loans (NPL) reached a historic low of three percent, which is a significant improvement compared to the highest level of as much as 22 percent in 2015.

The high inflow of foreign direct investments and other financial inflows made it possible to increase foreign exchange reserves to more than €21 billion at the end of February 2023, which represents a record level.

Predictions are that the Serbian economy will continue to attract foreign direct investments in the coming period, which will primarily be aimed at financing large infrastructure projects.

The agency estimates that the fiscal deficit will reach 3.3 percent of GDP in 2023. After this year, the government will return to its conservative fiscal management and target budget deficit of one to two percent of GDP.

Taking into account the projected fiscal outlook, the public debt will remain stable in the coming years, and the Agency estimates that it will decrease to around 47 percent of GDP by 2026.

The report also states that in conditions of global uncertainty, energy and economic crisis and growing inflation, the International Monetary Fund will also support Serbia, which will provide additional security to Serbian finances and enable more efficient management of the public sector.

Preservation of the credit rating, as one of the most important economic parameters of the state, will have positive effects on its status with international financial institutions and negotiating position when contracting credit arrangements.

Despite the crisis and uncertainty in the international environment, Serbia managed to respond to challenges, continue with investments and preserve economic growth and financial and economic stability, the report concludes.