Global ratings agency Moody’s said on Monday Serbia’s presidential election result ensures the continuation of credit-positive reform agenda, including further steps toward European Union (EU) accession and the restructuring of loss-making public enterprises.
Assuming that no new snap general elections are called, the next round of elections would not take place until 2020, curtailing policy volatility and facilitating Serbia’s EU integration efforts, Moody’s said in its “Credit implications of current events” report.
In Serbia’s April 2 presidential elections prime minister Aleksandar Vucic won an outright victory with more than 50% of the vote cast, sufficient to avoid a run-off, which strengthens his influence over Serbian politics and that of his Serbian Progressive Party (SNS), Moody’s said.
A broad continuity of the current government’s structural reform agenda is expected under a Vucic presidency, as authorities have so far remained committed to the measures included under a Stand-By Agreement (SBA) signed with the International Monetary Fund (IMF) in February 2015, the credit agency explained.
The measures include a highly successful fiscal consolidation drive under which the general government deficit tumbled to 1.4% of GDP in 2016 from 6.6% of in 2014 and the reduction of state aid to state-owned enterprises. State aid, in the form of direct subsidies, net lending through the budget, guarantees and arrear payments to state-owned enterprises, fell to 3.7% of GDP in 2016 from 5.2% two years earlier, Moody’s added.
In March, Moody’s upgraded Serbia’s long-term issuer and senior unsecured ratings to Ba3 from B1 and moved their outlook to “stable” from “positive”. The key drivers of the upgrade in Serbia’s senior unsecured and long-term issuer ratings are the country’s notable fiscal consolidation which has halted the increase in debt burden and reduces risks to the fiscal position, Moody’s said back then.
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