June 14 (SeeNews) - Standard & Poor's (S&P) has affirmed Serbia’s long-term foreign and local currency sovereign credit rating at BB+, with a stable outlook, Serbia's central bank, the NBS, said.
Serbia's credit rating is supported by the central bank's credible monetary policy and a moderate level of public debt, important preconditions for adopting comprehensive aid packages for corporates and households, whereby the local economy was supported and a major slump in economic activity prevented, NBS said in a statement on Friday.
S&P also noted a significant resilience of the Serbian economy achieved over the previous years, as well as the fact that when the global crisis induced by the coronavirus pandemic began, Serbia had a much lower macroeconomic imbalance than ten years ago, the central bank said.
"Serbia was equipped to respond adequately and promptly to the first wave of the crisis. We were among the first central banks in the world to react by trimming our key policy rate, which we cut four times last year - to its current lowest level of 1.0%. Also, when the crisis broke out, we were among the first to introduce a moratorium on loan repayment which, together with a timely provision of dinar and FX liquidity under extremely favourable terms, had a positive effect on other parts of our economy, as well," governor Jorgovanka Tabakovic said in the statement.
S&P underlined that Serbia's current account deficit is now much lower than a decade ago and its financing less reliant on portfolio inflow compared with the era after the financial crisis, when these flows were the dominant source of financing for the then twin deficits. At the same time, foreign direct investment (FDI), channelled predominantly into export-oriented sectors, has fully covered the current account deficit for six years already.