Credit rating agency Fitch Ratings has left unchanged the Republic of Serbia long- and short-term foreign and local currency sovereign credit ratings at level 'BB-'. The outlook is stable.

The affirmation of the Republic of Serbia credit rating by Fitch Ratings reflects the view that the government of the Republic of Serbia has continued with the implementation of fiscal consolidation, bringing the general government deficit to 1.3% of GDP in 2016.

According to Fitch Ratings the ratio of public debt to GDP declined for the first time since 2008, with the wage bill declining below 10% of GDP while public investment rose to 3.3% of GDP.

The main drivers of positive trend are the improvement in Serbia medium-term growth prospects, further fiscal consolidation resulting in a reduction in the general government debt to GDP ratio and continued reduction in net external debt. This rating agency also assumes that the EU accession talks and the IMF program will remain important policy anchors. Further opening of chapters in EU accession talks and restructuring of state owned enterprises will have positive impact on business environment indicators. This credit rating agency expects fiscal consolidation to continue over the forecast horizon. It also estimates the general government deficit to be around 1.3% of GDP in 2017.

Fitch expects the current account deficit to remain around 4-5% of GDP over the forecast horizon and to be fully covered by robust FDI inflows.