The International Monetary Fund has completed the third review of Serbia's economic programme under the Policy Coordination Instrument, allowing the country to continue demonstrating its commitment to fiscal discipline and structural reforms without drawing on IMF financial resources.
The IMF's Executive Board approved the review on a lapse-of-time basis on 15 June, according to a statement from the fund. Programme performance was strong, with all end-2025 quantitative targets on the fiscal deficit, primary current expenditure, domestic arrears and net international reserves met, the IMF said.
Serbia's economy grew by 2 percent in 2025 and activity strengthened in early 2026. The IMF projects growth of about 2.8 percent this year, accelerating to 4.0 percent in 2027. Headline inflation stood at 3.3 percent year-on-year in April, within the National Bank of Serbia's target band of 3 percent plus or minus 1.5 percentage points.
The 2026 budget maintains a fiscal deficit ceiling of 3 percent of GDP, consistent with fiscal rules on public wages and pensions. The IMF said the authorities have committed to keeping measures introduced in response to energy price shocks temporary and to advancing structural reforms in public financial management and public investment management.
Risks to the outlook are tilted to the downside, the IMF noted, citing the war in the Middle East weighing on global markets. Serbia's external position, moderate public debt of 44.8 percent of GDP, high international reserves and a well-capitalised banking system should help the economy navigate these challenges, according to the fund.
The IMF recommended maintaining a monetary policy tightening bias to contain inflation and financial stability risks, given continued double-digit household credit growth and expansion of the mortgage guarantee scheme for first-time homebuyers. The fund said the mortgage guarantee scheme should not be further expanded.
On fiscal risks, the IMF highlighted the need to address domestic arrears at the state-owned Roads of Serbia company and complete an assessment of the financial position of the City of Belgrade. It also called for improved appraisal and monitoring of large public investment projects, including those outside regular processes.
Sustained energy sector reform was identified as increasingly important given elevated energy prices and security risks. The IMF said restructuring efforts at state power company EPS should accelerate, with progress needed toward cost-recovery electricity tariffs and stronger payment discipline among major debtors.
Broader governance reforms recommended by the IMF include reducing integrity risks in business regulation, licensing and inspections. The fund welcomed plans to extend asset declaration requirements to state-owned enterprise top managers and board members through an amendment to Serbia's anti-corruption law.
The Policy Coordination Instrument is designed for IMF member countries that do not need financial resources from the fund but seek to demonstrate commitment to reform agendas or unlock financing from other official creditors or private investors.
Sources: imf.org
