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Serbia, Government of -- Moody's - Serbia's credit profile supported by relatively high wealth, robust growth potential and fiscal consolidation

·24 mins read

<!DOCTYPE html> <html lang="" xml:lang=""> <head> <title>/nwsys/www/images/PBC_1242913</title> <meta http-equiv="Content-Type" content="text/html; charset=UTF-8"/> <meta name="generator" content="pdftohtml 0.36"/> <meta name="date" content="2020-09-03T02:35:38+00:00"/> <style type="text/css"> <!-- .xflip { -moz-transform: scaleX(-1); -webkit-transform: scaleX(-1); -o-transform: scaleX(-1); transform: scaleX(-1); filter: fliph; } .yflip { -moz-transform: scaleY(-1); -webkit-transform: scaleY(-1); -o-transform: scaleY(-1); transform: scaleY(-1); filter: flipv; } .xyflip { -moz-transform: scaleX(-1) scaleY(-1); -webkit-transform: scaleX(-1) scaleY(-1); -o-transform: scaleX(-1) scaleY(-1); transform: scaleX(-1) scaleY(-1); filter: fliph + flipv; } --> </style> </head> <body bgcolor="#A0A0A0" vlink="blue" link="blue"> <!-- Page 1 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;} .ft00{font-size:18px;font-family:Times;color:#000000;} .ft01{font-size:18px;font-family:Times;color:#1257c7;} .ft02{font-size:13px;font-family:Times;color:#0d0c0c;} .ft03{font-size:13px;font-family:Times;color:#000000;} .ft04{font-size:13px;font-family:Times;color:#1b62b7;} .ft05{font-size:13px;line-height:30px;font-family:Times;color:#0d0c0c;} --> </style> <div id="page1-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PBC_1242913001.png" alt="background image"/> <p style="position:absolute;top:155px;left:108px;white-space:nowrap" class="ft00"><b>Research Announcement:&#160;</b></p> <p style="position:absolute;top:155px;left:364px;white-space:nowrap" class="ft01"><b>Moody's - Serbia's credit profile supported by</b></p> <p style="position:absolute;top:180px;left:108px;white-space:nowrap" class="ft01"><b>relatively high wealth, robust growth potential and fiscal consolidation</b></p> <p style="position:absolute;top:216px;left:108px;white-space:nowrap" class="ft02">London, September 03, 2020 --</p> <p style="position:absolute;top:257px;left:108px;white-space:nowrap" class="ft03">»&#160;Serbia has executed a strong fiscal consolidation drive which provides a degree of resilience to</p> <p style="position:absolute;top:277px;left:127px;white-space:nowrap" class="ft03">the expected deterioration in public finances in the context of the pandemic.</p> <p style="position:absolute;top:307px;left:108px;white-space:nowrap" class="ft03">»&#160;The economy benefits from a generally more stable macroeconomic environment that will support</p> <p style="position:absolute;top:326px;left:127px;white-space:nowrap" class="ft03">robust growth potential after the coronavirus-induced recession.</p> <p style="position:absolute;top:362px;left:108px;white-space:nowrap" class="ft02">The credit profile of&#160;</p> <p style="position:absolute;top:362px;left:247px;white-space:nowrap" class="ft04">Serbia</p> <p style="position:absolute;top:362px;left:293px;white-space:nowrap" class="ft02">&#160;(Ba3 positive) is supported by its relatively high income compared to</p> <p style="position:absolute;top:382px;left:108px;white-space:nowrap" class="ft02">peers alongside a relatively large and diverse manufacturing sector which helps to attract sizeable</p> <p style="position:absolute;top:401px;left:108px;white-space:nowrap" class="ft05">foreign investment, Moody's Investors Service said in a new report.<br/>Relatively low and stable inflation as well as enhancements to the monetary policy framework have</p> <p style="position:absolute;top:451px;left:108px;white-space:nowrap" class="ft02">also led to a more stable macroeconomic environment, while the&#160;</p> <p style="position:absolute;top:451px;left:561px;white-space:nowrap" class="ft04">European Union</p> <p style="position:absolute;top:451px;left:675px;white-space:nowrap" class="ft02">&#160;(Aaa stable)</p> <p style="position:absolute;top:470px;left:108px;white-space:nowrap" class="ft05">accession process will continue to drive gradual institutional improvements.<br/>“The Serbian authorities' budgetary consolidation since 2015 has led to a marked improvement in</p> <p style="position:absolute;top:520px;left:108px;white-space:nowrap" class="ft02">fiscal metrics, with primary surpluses achieved in every year since 2016,” said Evan Wohlmann, a</p> <p style="position:absolute;top:540px;left:108px;white-space:nowrap" class="ft02">Moody's Vice President - Senior Credit Officer and the report's author. “There has been a marked</p> <p style="position:absolute;top:559px;left:108px;white-space:nowrap" class="ft02">reduction in the government debt burden to 52.9% of GDP at the end of 2019, which provides a</p> <p style="position:absolute;top:579px;left:108px;white-space:nowrap" class="ft05">degree of fiscal space to absorb the coronavirus-induced deterioration in public finances in 2020.”<br/>Nevertheless, a challenging business environment arising from weaknesses in the rule of law and</p> <p style="position:absolute;top:628px;left:108px;white-space:nowrap" class="ft02">a still sizeable informal sector weighs on growth potential. Furthermore, the large, albeit gradually</p> <p style="position:absolute;top:648px;left:108px;white-space:nowrap" class="ft02">declining, share of foreign-currency government debt and the banking sector's high degree of</p> <p style="position:absolute;top:667px;left:108px;white-space:nowrap" class="ft02">euroisation also pose credit risks. Contingent liabilities from the state-owned enterprise sector still</p> <p style="position:absolute;top:687px;left:108px;white-space:nowrap" class="ft05">remain significant and the pace of reforms to contain these risks remains slow.<br/>The positive rating outlook reflects recent improvements to debt metrics and Serbia's robust</p> <p style="position:absolute;top:737px;left:108px;white-space:nowrap" class="ft02">medium-term growth outlook. Upward pressure on Serbia’s rating could arise if Moody's concludes</p> <p style="position:absolute;top:756px;left:108px;white-space:nowrap" class="ft02">that, over the medium-term, the government’s policy stance will continue to support a downward</p> <p style="position:absolute;top:776px;left:108px;white-space:nowrap" class="ft05">trend in government debt.<br/>Conversely, the outlook could be stabilised if Moody's concludes that Serbia's fiscal strength would</p> <p style="position:absolute;top:826px;left:108px;white-space:nowrap" class="ft02">be materially eroded over the medium-term, or from the emergence of a large and sustained current-</p> <p style="position:absolute;top:845px;left:108px;white-space:nowrap" class="ft05">account deficit which would be increasingly difficult to finance.<br/>Subscribers can access the report at:&#160;</p> <p style="position:absolute;top:875px;left:372px;white-space:nowrap" class="ft04">http://www.moodys.com/researchdocumentcontentpage.aspx?</p> <p style="position:absolute;top:895px;left:108px;white-space:nowrap" class="ft04">docid=PBC_1237594</p> <p style="position:absolute;top:925px;left:108px;white-space:nowrap" class="ft02">NOTE TO JOURNALISTS ONLY: For more information, please call one of our global</p> <p style="position:absolute;top:945px;left:108px;white-space:nowrap" class="ft02">press information hotlines: New York <PhoneNo>+1-212-553-0376</PhoneNo>, London <PhoneNo>+44-20-7772-5456</PhoneNo>, Tokyo</p> <p style="position:absolute;top:964px;left:108px;white-space:nowrap" class="ft02"><PhoneNo>+813-5408-4110</PhoneNo>, Hong Kong <PhoneNo>+852-3758-1350</PhoneNo>, Sydney <PhoneNo>+61-2-9270-8141</PhoneNo>, Mexico City</p> <p style="position:absolute;top:984px;left:108px;white-space:nowrap" class="ft02"><PhoneNo>001-888-779-5833</PhoneNo>, São Paulo <PhoneNo>0800-891-2518</PhoneNo>, or Buenos Aires <PhoneNo>0800-666-3506</PhoneNo>. You can also email</p> <p style="position:absolute;top:1003px;left:108px;white-space:nowrap" class="ft02">us at mediarelations@moodys.com or visit our web site at www.moodys.com.</p> </div> <!-- Page 2 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;} .ft06{font-size:13px;line-height:23px;font-family:Times;color:#0d0c0c;} --> </style> <div id="page2-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PBC_1242913002.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft02">This publication does not announce a credit rating action. For any credit ratings referenced in this</p> <p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft02">publication, please see the ratings tab on the issuer/entity page on&#160;</p> <p style="position:absolute;top:133px;left:574px;white-space:nowrap" class="ft04">www.moodys.com</p> <p style="position:absolute;top:133px;left:701px;white-space:nowrap" class="ft02">&#160;for the most</p> <p style="position:absolute;top:153px;left:108px;white-space:nowrap" class="ft05">updated credit rating action information and rating history.<br/>Evan Wohlmann</p> <p style="position:absolute;top:202px;left:108px;white-space:nowrap" class="ft02">VP-Sr Credit Officer</p> <p style="position:absolute;top:222px;left:108px;white-space:nowrap" class="ft02">Sovereign Risk Group</p> <p style="position:absolute;top:241px;left:108px;white-space:nowrap" class="ft02">Moody's Investors Service Ltd.</p> <p style="position:absolute;top:261px;left:108px;white-space:nowrap" class="ft02">JOURNALISTS: 44 20 7772 5456</p> <p style="position:absolute;top:280px;left:108px;white-space:nowrap" class="ft05">Client Service: 44 20 7772 5454<br/>Yves Lemay</p> <p style="position:absolute;top:330px;left:108px;white-space:nowrap" class="ft02">MD-Sovereign/Sub Sovereign</p> <p style="position:absolute;top:350px;left:108px;white-space:nowrap" class="ft02">Sovereign Risk Group</p> <p style="position:absolute;top:369px;left:108px;white-space:nowrap" class="ft02">Moody's Investors Service Ltd.</p> <p style="position:absolute;top:389px;left:108px;white-space:nowrap" class="ft02">JOURNALISTS: 44 20 7772 5456</p> <p style="position:absolute;top:408px;left:108px;white-space:nowrap" class="ft05">Client Service: 44 20 7772 5454<br/>Releasing Office:</p> <p style="position:absolute;top:458px;left:108px;white-space:nowrap" class="ft02">Moody's Investors Service Ltd.</p> <p style="position:absolute;top:477px;left:108px;white-space:nowrap" class="ft02">One Canada Square</p> <p style="position:absolute;top:497px;left:108px;white-space:nowrap" class="ft02">Canary Wharf</p> <p style="position:absolute;top:516px;left:108px;white-space:nowrap" class="ft02">London, E14 5FA</p> <p style="position:absolute;top:536px;left:108px;white-space:nowrap" class="ft02">United Kingdom</p> <p style="position:absolute;top:555px;left:108px;white-space:nowrap" class="ft02">JOURNALISTS: 44 20 7772 5456</p> <p style="position:absolute;top:575px;left:108px;white-space:nowrap" class="ft02">Client Service: 44 20 7772 5454</p> <p style="position:absolute;top:664px;left:108px;white-space:nowrap" class="ft02">© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their</p> <p style="position:absolute;top:684px;left:108px;white-space:nowrap" class="ft06">licensors and affiliates (collectively, “MOODY’S”). All rights reserved.<br/>CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT</p> <p style="position:absolute;top:726px;left:108px;white-space:nowrap" class="ft02">RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE</p> <p style="position:absolute;top:746px;left:108px;white-space:nowrap" class="ft02">CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES,</p> <p style="position:absolute;top:765px;left:108px;white-space:nowrap" class="ft02">AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S</p> <p style="position:absolute;top:785px;left:108px;white-space:nowrap" class="ft02">(COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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Because of the possibility of human or mechanical error as well as other</p> <p style="position:absolute;top:651px;left:108px;white-space:nowrap" class="ft02">factors, however, all information contained herein is provided “AS IS” without warranty of any kind.</p> <p style="position:absolute;top:670px;left:108px;white-space:nowrap" class="ft02">MOODY'S adopts all necessary measures so that the information it uses in assigning a credit</p> <p style="position:absolute;top:690px;left:108px;white-space:nowrap" class="ft02">rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when</p> <p style="position:absolute;top:709px;left:108px;white-space:nowrap" class="ft02">appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot</p> <p style="position:absolute;top:729px;left:108px;white-space:nowrap" class="ft02">in every instance independently verify or validate information received in the rating process or in</p> <p style="position:absolute;top:748px;left:108px;white-space:nowrap" class="ft06">preparing its Publications.<br/>To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,</p> <p style="position:absolute;top:791px;left:108px;white-space:nowrap" class="ft02">representatives, licensors and suppliers disclaim liability to any person or entity for any indirect,</p> <p style="position:absolute;top:810px;left:108px;white-space:nowrap" class="ft02">special, consequential, or incidental losses or damages whatsoever arising from or in connection</p> <p style="position:absolute;top:830px;left:108px;white-space:nowrap" class="ft02">with the information contained herein or the use of or inability to use any such information, even if</p> <p style="position:absolute;top:849px;left:108px;white-space:nowrap" class="ft02">MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers</p> <p style="position:absolute;top:869px;left:108px;white-space:nowrap" class="ft02">is advised in advance of the possibility of such losses or damages, including but not limited to:</p> <p style="position:absolute;top:888px;left:108px;white-space:nowrap" class="ft02">(a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant</p> <p style="position:absolute;top:908px;left:108px;white-space:nowrap" class="ft06">financial instrument is not the subject of a particular credit rating assigned by MOODY’S.<br/>To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,</p> <p style="position:absolute;top:950px;left:108px;white-space:nowrap" class="ft02">representatives, licensors and suppliers disclaim liability for any direct or compensatory losses</p> <p style="position:absolute;top:970px;left:108px;white-space:nowrap" class="ft02">or damages caused to any person or entity, including but not limited to by any negligence (but</p> <p style="position:absolute;top:989px;left:108px;white-space:nowrap" class="ft02">excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt,</p> <p style="position:absolute;top:1009px;left:108px;white-space:nowrap" class="ft02">by law cannot be excluded) on the part of, or any contingency within or beyond the control of,</p> <p style="position:absolute;top:1028px;left:108px;white-space:nowrap" class="ft02">MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,</p> </div> <!-- Page 4 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;}--> </style> <div id="page4-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PBC_1242913004.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft02">arising from or in connection with the information contained herein or the use of or inability to use</p> <p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft06">any such information.<br/>NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,</p> <p style="position:absolute;top:176px;left:108px;white-space:nowrap" class="ft02">COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF</p> <p style="position:absolute;top:195px;left:108px;white-space:nowrap" class="ft02">ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE</p> <p style="position:absolute;top:215px;left:108px;white-space:nowrap" class="ft06">BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.<br/>Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s</p> <p style="position:absolute;top:257px;left:108px;white-space:nowrap" class="ft02">Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and</p> <p style="position:absolute;top:277px;left:108px;white-space:nowrap" class="ft02">municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s</p> <p style="position:absolute;top:296px;left:108px;white-space:nowrap" class="ft02">Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s</p> <p style="position:absolute;top:316px;left:108px;white-space:nowrap" class="ft02">Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from</p> <p style="position:absolute;top:335px;left:108px;white-space:nowrap" class="ft02">$1,000 to approximately $2,700,000. MCO and Moody’s Investors Service also maintain policies</p> <p style="position:absolute;top:355px;left:108px;white-space:nowrap" class="ft02">and procedures to address the independence of Moody’s Investors Service credit ratings and credit</p> <p style="position:absolute;top:374px;left:108px;white-space:nowrap" class="ft02">rating processes. Information regarding certain affiliations that may exist between directors of MCO</p> <p style="position:absolute;top:394px;left:108px;white-space:nowrap" class="ft02">and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and</p> <p style="position:absolute;top:413px;left:108px;white-space:nowrap" class="ft02">have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted</p> <p style="position:absolute;top:433px;left:108px;white-space:nowrap" class="ft02">annually at&#160;</p> <p style="position:absolute;top:433px;left:188px;white-space:nowrap" class="ft04">www.moodys.com</p> <p style="position:absolute;top:433px;left:315px;white-space:nowrap" class="ft02">&#160;under the heading “Investor Relations — Corporate Governance —</p> <p style="position:absolute;top:452px;left:108px;white-space:nowrap" class="ft06">Director and Shareholder Affiliation Policy.”<br/>Additional terms for Australia only: Any publication into Australia of this document is pursuant to the</p> <p style="position:absolute;top:495px;left:108px;white-space:nowrap" class="ft02">Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited</p> <p style="position:absolute;top:514px;left:108px;white-space:nowrap" class="ft02">ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136</p> <p style="position:absolute;top:534px;left:108px;white-space:nowrap" class="ft02">972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale</p> <p style="position:absolute;top:553px;left:108px;white-space:nowrap" class="ft02">clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access</p> <p style="position:absolute;top:573px;left:108px;white-space:nowrap" class="ft02">this document from within Australia, you represent to MOODY’S that you are, or are accessing</p> <p style="position:absolute;top:592px;left:108px;white-space:nowrap" class="ft02">the document as a representative of, a “wholesale client” and that neither you nor the entity you</p> <p style="position:absolute;top:612px;left:108px;white-space:nowrap" class="ft02">represent will directly or indirectly disseminate this document or its contents to “retail clients” within</p> <p style="position:absolute;top:631px;left:108px;white-space:nowrap" class="ft02">the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as</p> <p style="position:absolute;top:651px;left:108px;white-space:nowrap" class="ft02">to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or</p> <p style="position:absolute;top:670px;left:108px;white-space:nowrap" class="ft06">any form of security that is available to retail investors.<br/>Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency</p> <p style="position:absolute;top:713px;left:108px;white-space:nowrap" class="ft02">subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc.,</p> <p style="position:absolute;top:732px;left:108px;white-space:nowrap" class="ft02">a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating</p> <p style="position:absolute;top:752px;left:108px;white-space:nowrap" class="ft02">agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization</p> <p style="position:absolute;top:771px;left:108px;white-space:nowrap" class="ft02">(“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-</p> <p style="position:absolute;top:791px;left:108px;white-space:nowrap" class="ft02">NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated</p> <p style="position:absolute;top:810px;left:108px;white-space:nowrap" class="ft02">obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit</p> <p style="position:absolute;top:830px;left:108px;white-space:nowrap" class="ft02">rating agencies registered with the Japan Financial Services Agency and their registration numbers</p> <p style="position:absolute;top:849px;left:108px;white-space:nowrap" class="ft06">are FSA Commissioner (Ratings) No. 2 and 3 respectively.<br/>MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including</p> <p style="position:absolute;top:892px;left:108px;white-space:nowrap" class="ft02">corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated</p> <p style="position:absolute;top:911px;left:108px;white-space:nowrap" class="ft02">by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to</p> <p style="position:absolute;top:931px;left:108px;white-space:nowrap" class="ft02">MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging</p> <p style="position:absolute;top:950px;left:108px;white-space:nowrap" class="ft06">from JPY125,000 to approximately JPY250,000,000.<br/>MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory</p> <p style="position:absolute;top:993px;left:108px;white-space:nowrap" class="ft02">requirements.</p> </div> </body> </html>