S&P’s Downgrade Serbia’s Credit Rating Outlook To Negative

Standard & Poors Ratings Services (S&Ps) has downgraded the outlook on Serbias credit ratings from stable to negative, whereas its BB longterm and B shortterm sovereign credit ratings have been affirmed. The outlook downgrade was triggered by increasing political risk

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Standard & Poors Ratings Services (S&Ps) has downgraded the outlook on Serbias credit ratings from stable to negative, whereas its BB longterm and B shortterm sovereign credit ratings have been affirmed.

The outlook downgrade was triggered by increasing political risk induced by the governments collapse last weekend. It reflects the growing risk that early parliamentary elections could bring a new government whose prime focus might not be pursuing clear actions towards EU membership.

In addition, according to S&Ps, the lowering of Serbias sovereign ratings might follow if the new government disregards the economic and political benefits of EU membership as this decision would result in further external imbalances rise, budgetary problems and descending economic reforms.

Previously S&Ps downgraded Serbias outlook from positive to stable in July 2007 due to loosening fiscal policy that exacerbated the countrys rising external imbalances.

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