Serbia’s fiscal policy, public investment commitments and institutional reforms will come under international scrutiny as Fitch Ratings prepares its sovereign credit assessment, with the country seeking to preserve macroeconomic stability while its incoming administration considers changes to economic governance.
Fitch currently assigns Serbia a BB+ rating with a Positive Outlook, one level below investment grade. The agency said the Student List’s victory in the parliamentary election had reduced uncertainty over the political outcome, although its economic programme and fiscal priorities remained insufficiently defined.
The Student List secured 141 of 250 parliamentary seats, ending 14 years of government dominated by the previous political administration. Its programme includes reviewing major state projects, strengthening the rule of law, improving business predictability and supporting domestic investment.
Budget deficit and public debt remain central concerns
Serbia enters the transition with relatively moderate public debt, substantial foreign-exchange reserves and a record of macroeconomic stability. Fiscal pressures have increased. The revised 2026 budget raised the projected central-government deficit to 3.5% of GDP, from 2.9%. The previous administration projected general-government debt at approximately 44.2% of GDP by year-end.
The World Bank expects economic growth to exceed 3% in 2026, supported by recovering industrial activity, automotive exports and private consumption. Weaker foreign direct investment, higher government spending and financial pressures at state-owned enterprises remain key vulnerabilities.
Fitch has indicated that fiscal discipline, stable external finances and institutional improvements could support an upgrade. Continued debt growth or weaker economic-policy implementation could instead lead to the Positive Outlook being revised to Stable.
Infrastructure reviews create uncertainty for investors
The incoming administration’s plans to examine state contracts could affect major transport, railway, energy and industrial infrastructure programmes financed through public expenditure, sovereign borrowing, international financial institutions and bilateral lenders.
The proposed reviews could introduce tighter procurement controls, greater disclosure of contractual obligations and reassessment of project economics. However, prolonged reviews, suspended projects or delayed payments could affect contractors, lenders and public enterprises.
For the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD) and KfW, predictable project implementation and transparent financial management remain important conditions for future lending.
Foreign investors await details of economic policy
Serbia’s development model has relied on foreign direct investment, export-oriented manufacturing, infrastructure spending and incentives for international companies. Weaker investment inflows, changing European industrial conditions and geopolitical uncertainty are putting pressure on this approach.
The incoming administration has signalled plans to strengthen domestic businesses, introduce a fairer tax system and improve competition. However, the implications for investment subsidies, industrial policy and future tax revenues remain unclear.
International investors will be assessing whether existing commitments remain enforceable, administrative procedures become more predictable and regulatory changes avoid prolonged uncertainty. Energy policy is another consideration, given Serbia’s exposure to international oil sanctions, electricity-sector investment requirements and financing relationships with European and non-European partners.
Investment-grade status could affect sovereign financing
Serbia already holds an investment-grade BBB- rating from S&P Global Ratings, awarded in October 2024. An upgrade from Fitch would provide additional confirmation of its credit standing among major international rating agencies.
Broader investment-grade recognition could increase demand for Serbian sovereign securities and strengthen access to institutional investors. Actual borrowing costs would still depend on global interest rates, market liquidity and investor risk appetite. Commercial banks, public enterprises and infrastructure borrowers could also benefit indirectly from improved sovereign financing conditions. A weaker credit outlook, by contrast, could increase investor caution as Serbia requires capital for energy modernisation, transport infrastructure and industrial development.
Fitch’s assessment will provide an early indication of how international creditors view the incoming administration’s fiscal framework, its handling of inherited investment commitments and its ability to maintain monetary and financial stability.
