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S&P, Fitch raise Serbia's ratings on fiscal overperformance

S&P Global Ratings and Fitch Ratings raised Serbia's credit ratings, with both agencies citing the country's fiscal overperformance and declining deficits and debt.

S&P upgraded Serbia's long-term foreign and local currency sovereign credit ratings to BB from BB- with a stable outlook. The short-term foreign and local currency sovereign credit ratings were affirmed at B.

"We raised the rating because Serbia has displayed stronger fiscal metrics after years of containing costs and better revenue performance than anticipated, amid a steady economic recovery and limited current account deficits," the rating agency said.

"Stronger fiscal performance has put Serbia's high public debt on a downward path," S&P added. "The upgrade also takes into account a sustained improvement in Serbia's external performance, which has resulted in a steady decline in external indebtedness since 2012."

Serbia's general government deficits narrowed to an estimated 1% of GDP in 2017 from 6.6% of GDP in 2014, according to S&P. It said the country could post its lowest general government deficits in almost a decade.

Meanwhile, Fitch upgraded Serbia's long-term foreign- and local-currency issuer default ratings to BB from BB- with a stable outlook. The short-term ratings were affirmed at B.

After outperforming its budget deficit targets in 2017, Serbia is projected to post a fiscal surplus of 0.5% of GDP this year, the first since 2005, Fitch said.

After declining to 63.6% of GDP in 2017, Serbia's government debt is forecast to fall to 62.1% in 2018 and 60.6% in 2019 from a peak of 74.6% in 2015, according to Fitch.

Fitch expects Serbia's current account deficit to average 4.3% of GDP from 2017 to 2019, while S&P projected the deficit to average 4.1% of GDP from 2017 to 2020.

Serbia's real GDP is expected to grow 3% in 2018 and 3.3% in 2019, up from 1.9% in 2017, Fitch said.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.