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Serbia's public debt to fall to 60%/GDP in mid-run - Erste

Serbia's public debt to fall to 60%/GDP in mid-run - Erste Source: serbia.com

BELGRADE (Serbia), December 4 (SeeNews) - Austria's Erste Group said on Monday it expects Serbia to reduce its public debt to 60% of the projected gross domestic product (GDP) in the medium term. 

Serbia's debt-to-GDP ratio will be brought down by the lower financing needs based on the smaller deficit and more favourable economic developments, the Erste Group said in a CEE research paper.

The issuance pattern of Serbia will remain similar in the upcoming period, but the country will focus on longer maturities, such as seven to ten-year benchmark bonds, domestic market issuance and local currency papers, according to Erste. 

"We saw strong interest from local and international investors, which brought yields on the domestic market to the historical minimum," the banking group noted.

As for the maturity of the $1 billion Eurobond in the last quarter of 2018, Serbia could tap international markets, Erste Group said.

"However, in that case, we expect to see euro-denominated paper
(favorable financing conditions + reduction of FX risk)."

Serbia's president Aleksandar Vucic said last month the country's central government debt was equivalent to 62.7% of the projected 2017 GDP. 

In September, Erste lowered its forecast for Serbia’s economic expansion in 2017 to 2.1%, from 2.5% projected in June, due to 'disappointing' figures in the first half of the year. The forecast for Serbia’s economic growth in 2018 remained unchanged at 3.0%, while a 3.2% rise was expected in 2019.

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