Fitch to review Serbia's BB+ rating on November 20 as new government takes over

Fitch Ratings is due to review Serbia's sovereign credit rating on November 20. The review will be an early external test for the incoming government, with fiscal discipline, institutional reform and investment policy likely to draw the most attention from financial markets.

Fitch currently rates Serbia BB+ with a Positive Outlook, one notch below investment grade. According to the source report, the agency said the victory of the Student List in the October 25 parliamentary election had reduced uncertainty about the political outcome. It also noted that the movement's economic programme and fiscal priorities remained insufficiently defined.

The Student List won 141 of 250 seats in the National Assembly, ending 14 years of government dominated by the camp of Aleksandar Vučić. Its programme includes a review of major state projects, stronger rule of law, more predictable conditions for business and support for domestic investment.

Fiscal position under scrutiny

Serbia enters the transition with relatively moderate public debt, substantial foreign-exchange reserves and a record of macroeconomic stability that has supported its improving credit profile. Fiscal pressure has nevertheless increased.

The revised 2026 budget raised the projected central-government deficit to 3.5% of GDP, from 2.9%. The previous administration projected general-government debt at about 44.2% of GDP by the end of the year.

The World Bank expects growth of more than 3% in 2026, driven by a recovery in industry, automotive exports and private consumption. Weaker foreign direct investment, higher government spending and financial strain at state-owned enterprises remain the main vulnerabilities.

Fitch has indicated that continued fiscal discipline, stable external finances and institutional improvements could support an eventual upgrade. Sustained growth in government debt or slippage in economic policy could lead it to move the outlook from Positive to Stable.

Review of state projects and public investment

A key question is the future of state-financed infrastructure and energy projects. Transport corridors, railway modernisation, power-sector projects and industrial infrastructure have relied on a mix of budget spending, sovereign borrowing, loans from international financial institutions and bilateral financing.

The Student List's pledge to review state contracts points to tighter procurement controls, wider disclosure of contractual obligations and a reassessment of project economics. These steps could improve fiscal efficiency and investor confidence if they reduce procurement risk.

Broad project suspensions, lengthy contract reviews or delayed payments, however, could create immediate problems for contractors, lenders and public enterprises. For lenders such as the European Investment Bank, the EBRD and Germany's KfW, predictable project implementation and transparent financial management remain key conditions for future lending.

Foreign investors wait for details

Serbia's growth model has depended heavily on foreign direct investment, export-oriented manufacturing, infrastructure spending and incentives for international companies. That model is under pressure from weaker investment inflows, changing industrial conditions in Europe and geopolitical uncertainty.

The new administration has said it wants to strengthen domestic businesses, introduce a fairer tax system and improve competitive conditions. The financial implications are still unclear, particularly for investment subsidies, industrial policy and future tax revenue.

International investors are likely to look for assurances that existing commitments remain enforceable and that administrative procedures become more predictable. Energy policy is another factor, given Serbia's exposure to international oil sanctions, the investment needs of the power sector and its financing ties with European and non-European partners.

What an upgrade would mean

Serbia already holds an investment-grade rating of BBB- from S&P Global Ratings, awarded in October 2024. A matching move by Fitch would add confirmation from a second major agency.

Broader investment-grade status could support demand for Serbian government securities and improve the country's standing with institutional investors. Actual borrowing costs would still depend on global interest rates, liquidity and risk appetite. Commercial banks, public enterprises and infrastructure borrowers could benefit indirectly from better sovereign funding conditions.

A weaker outlook could instead raise investor caution at a time when Serbia needs substantial capital for energy modernisation, transport infrastructure and industry.

Next milestone: November 20

The November 20 review will not necessarily lead to an immediate rating change. It will, however, give a first external assessment of the political transition and of the credibility of the new government's economic direction.

The main signals will be the government's proposed fiscal framework, its handling of inherited public investment commitments and its ability to preserve monetary and financial stability. The source report notes that institutional reform could strengthen the sovereign credit profile if accompanied by predictable economic management, while political and administrative restructuring that delays investment decisions or weakens budget control would add execution risk.