An International Monetary Fund (IMF) mission, led by Annette Kyobe, visited Belgrade from October 22 to 30, 2025, to conduct discussions on the Second Review under the Policy Coordination Instrument.
At the end of the discussions, the mission noted in a statement on Thursday that economic activity “has slowed amid both external and domestic challenges”. It is projected that growth in 2025 will be 2.1 per cent, reflecting weaker public investment, lower FDI inflows, and weaker consumption.
After temporarily rising above the upper bound of the NBS’s tolerance band due to higher food prices from poor harvests, headline inflation eased to 2.9 per cent in September, reflecting price and margin controls on food and household essentials, the mission added.
“Growth is projected to recover to 3 per cent in 2026, driven by continued gains in household disposable income, supportive credit conditions, new manufacturing export capacities, and the resolution of NIS-related energy supply uncertainty. Inflation is likely to rise moderately in 2026. The current account deficit is projected to widen to around six per cent of GDP before moderating, and foreign exchange reserves are expected to remain at comfortable levels.
“Risks to the outlook are on the downside. A protracted resolution of NIS and domestic political tensions could weaken economic activity. Significant fiscal and external buffers, including high foreign exchange reserves and government deposits, a resilient banking sector and moderate public debt cushion the risks,” said the IMF mission.
According to the mission, maintaining prudent macroeconomic policy is essential to safeguarding credibility while preserving policy space to respond to shocks. The 3.0 per cent of GDP ceiling on fiscal deficits, striking an appropriate balance between current spending needs and investments, it pointed out, “is a fundamental policy anchor”.
The Serbian authorities are strengthening public investment management, with further gains achievable through enhanced cost-benefit analyses, fiscal risk assessments, and stronger procurement practices, according to the mission.
The mission also disclosed that the authorities “are also committed to improving fiscal transparency”.
“They are making good progress toward completing Serbia’s first tax expenditure report, conducting an actuarial study of the pension system, and publishing additional fiscal data related to mineral resources, state-owned enterprises (SOEs), and municipal finances.
“Energy sector reforms are progressing, but further efforts are needed to secure the financial sustainability and operational efficiency of energy SOEs. Serbia is pursuing a range of critical energy investments, and given the sector’s significant financing needs, prioritising the most cost-effective projects will be key to strengthening both economic performance and energy security,” said the mission.
The current monetary policy stance remains appropriate and continues to underpin Serbia’s macroeconomic stability, including by taking into account temporary price fluctuations, the IMF explained.
“As the effects of price and margin controls are expected to dissipate over time, the authorities should stay vigilant to potential upside inflation risks,” the mission advised.
The mission welcomed the authorities’ intention to phase out the price and margin controls as planned by the end of February. The authorities are committed to resolving the sanctions on NIS in a way that ensures an uninterrupted petroleum supply in Serbia.
