NBS: Standard and Poor’s raises Serbia’s credit rating to BB +

The rating agency Standard and Poor’s has increased Serbia’s credit rating from “BB” to “BB +”, the National Bank of Serbia announced.

The decision to increase Serbia’s credit rating was made by Standard and Poor’s in the conditions of confirmed resilience of our economy to external shocks and growth driven by investments, significant improvement of our macroeconomic indicators, adequate monetary policy of the National Bank of Serbia and sound fiscal discipline.

Analyzing developments in the banking sector, the NBS states that the agency particularly highlighted significant results in terms of sustainable reduction of problem loans, by nearly 75 percent since the implementation of the Strategy for their resolution.

“In support of the stability of the domestic financial system, it is also stated that the banking sector in Serbia is highly capitalized and liquid, with a good domestic deposit base,” NBS said.

The Agency also estimates that Serbia’s economic growth in 2019, despite the global slowdown, will be higher than initially projected and will be 3.6 percent, while for 2020 it is projected that economic growth will be close to four percent with continued export and strong investments.

It is also emphasized the contribution of domestic demand to economic growth, driven by double-digit growth in investment in stable business conditions, with private consumption supported by favorable developments in the labor market, and as one of the important factors on which Serbia was immediately granted a positive outlook for further increase of credit rating, the continuous inflow of foreign direct investments and their increasingly efficient investment were highlighted.

Standard and Poor’s emphasizes the NBS’s performance in maintaining low and stable inflation and expects the central bank to successfully maintain price stability in the medium term, as it has demonstrated operational independence and has earned credibility over the past six years, the statement said.

It is also emphasized that NBS interventions in the foreign exchange market in order to prevent excessive short-term fluctuations in the dinar exchange rate against the euro, significantly contributed to maintaining the price and financial stability and growth of the country’s foreign currency reserves to a record level, and in such conditions the dinar bond market was deepened, by extending the maturity dinar government securities for ten years.