March 21 (SeeNews) - Moody's change of Serbia's B1 sovereign rating to positive from stable is somewhat surprising, but justified with the ongoing political drive to pursue fiscal reforming and stability-oriented policies, Raiffeisen Research said on Monday.
Late on Friday, Moody's said it raised its outlook on Serbia's B1 sovereign rating to positive from stable, citing the authorities' commitment to addressing the deterioration in the government's debt burden.
"By and large we share this assessment but our idea was that the rating agencies could postpone any rating move in the current pre-election phase," Raiffeisen Research said in a report.
Serbia will hold early general elections on April 24, proposed by prime minister Aleksandar Vucic in an attempt to unblock reforms and prepare Serbia for EU membership.
Following the elections, Serbia's ratings could be revised, Erste Group Research said in a report.
"As outlook is concerned, rating upgrade is pending upcoming elections i.e. subsiding political risks and commitment from new Government to pursue reform agenda," it commented.
Moody's rating on Serbia, four steps below investment grade, is equal to Fitch's B+ and is one rung below Standard & Poor's BB- assessment. In December, Fitch improved its outlook on Serbia to positive, whereas in January, S&P raised its outlook to stable, citing reform commitments.
"The first driver for the change in the outlook on Serbia's B1 government bond rating to positive from stable is the expected impact of past and planned structural reforms and enhancements to Serbia's institutions. Serbia has undergone material improvements, and the authorities plan to go further in the coming few years," Moody's said on Friday. "Pursuant to the Stand-By Arrangement (SBA) signed with the IMF in February 2015, Serbian authorities have already implemented a number of reforms to remove obstacles to investment and to support business, to restore confidence in the financial sector and to consolidate the fiscal position."