Fitch Ratings has affirmed Serbia’s long-term foreign-currency sovereign credit rating at BB+ with a positive outlook, keeping the country one level below investment grade despite improving public finances, solid foreign-exchange reserves and expectations that investment will continue supporting economic growth.
The latest decision leaves Serbia with differing assessments from the three major international credit rating agencies. S&P Global Ratings raised the country to investment-grade status in October 2024, while Moody’s continues to assign a Ba2 rating. Fitch’s latest affirmation therefore maintains a split among the leading agencies over Serbia’s sovereign credit profile.
The differing ratings have implications for access to financing. Investors permitted to rely on the highest available sovereign rating may already classify Serbia as investment grade. More conservative institutional investors, bank credit committees and insurance companies may continue to require investment-grade assessments from at least two major agencies before revising their internal risk classifications.
Fiscal Performance Supports Rating Outlook
According to Fitch, Serbia’s general government deficit is projected to remain within the IMF-agreed ceiling of 3% of GDP in 2026, following a deficit of 2.4% of GDP in 2025. The agency also expects a recently announced government support programme, valued at around 0.6% of GDP, to be financed through stronger collections from corporate income tax, value-added tax (VAT) and non-tax revenues.
While the positive outlook indicates that a future rating upgrade remains possible, Fitch identified political developments as an increasingly important factor in its assessment. Political uncertainty, the possibility of early elections and risks to policy continuity now weigh more heavily on the sovereign’s rating trajectory than traditional fiscal or external indicators.
Credit Rating Influences Infrastructure Financing
The distinction between BB+ and investment-grade status extends beyond the government’s borrowing costs. The sovereign credit profile affects financing conditions for banks, public utilities, state-owned enterprises and major infrastructure projects whose revenues or contractual arrangements depend on public institutions. This is particularly significant for investments in electricity transmission networks, renewable energy integration, transport infrastructure and municipal development, where projects typically require long-term financing supported by public guarantees, regulated tariffs or state-owned counterparties. A broader consensus among rating agencies on Serbia’s investment-grade status could improve access to institutional financing while lowering the country risk premium applied by international lenders.
External Capital Remains Central to Investment Model
Serbia’s investment and financing model continues to rely heavily on foreign direct investment, lending from international banks, bilateral financing and state-backed infrastructure arrangements. Domestic capital markets have yet to develop sufficient depth to replace these external funding sources. As a result, greater alignment among the major credit rating agencies could significantly improve the availability and pricing of international capital. Although Serbia’s fiscal position remains stable, further sovereign rating upgrades are expected to depend increasingly on institutional predictability, consistent policy implementation and the government’s ability to maintain continuity in executing investment projects.
