IMF Concludes Second Review of Serbia's Economic Program, Citing Fiscal Discipline Amid Slowed Growth

IMF Executive Board Completes Second Review for Serbia

The International Monetary Fund (IMF) Executive Board officially concluded its Second Review under the Policy Coordination Instrument (PCI) for Serbia on December 17, 2025. The review acknowledged a slowdown in Serbia's economic growth but commended the country's sustained fiscal discipline and progress in structural reforms.

Economic Performance and Future Outlook

The IMF report indicated that Serbia's economic activity has experienced a slowdown, with real GDP growth estimated at around 2 percent in 2025. This deceleration is attributed to rising domestic and external headwinds, including domestic protests and heightened energy-security risks following sanctions on the macro-critical oil company NIS. Despite this, the IMF projects a recovery, with growth expected to accelerate to 3 percent in 2026 and further to 4.6 percent in 2027. Headline inflation has eased to below the National Bank of Serbia's (NBS) target of 3 percent, and monetary policy remains cautious.

Fiscal Prudence and Strong Buffers

A key highlight of the review was Serbia's continued commitment to fiscal discipline. The IMF noted that fiscal deficits are on track to remain below the agreed 3 percent of GDP ceiling, which serves as a crucial program anchor. This achievement is supported by contained current spending and careful prioritization of investments. Furthermore, prudent macroeconomic policies have enabled Serbia to build substantial buffers, including ample foreign exchange reserves, sizable government deposits, and a resilient, well-capitalized banking sector, which are vital for navigating current challenges.

Advancing Structural Reforms and Official Reactions

Under the PCI, Serbian authorities are actively advancing key structural reforms. These efforts are concentrated in critical areas such as public financial and investment management and the energy sector. The Policy Coordination Instrument itself, approved for Serbia on December 9, 2024, for a 36-month period, is advisory in nature and does not involve financial resources, serving to reinforce commitment to sound policies.

Serbian officials welcomed the IMF's assessment. Finance Minister Sinisa Mali stated that the report was 'a confirmation of the stability of the Serbian economy and the progress made over the past 15 years'. Similarly, NBS Governor Jorgovanka Tabakovic emphasized that the IMF's findings 'confirm the soundness of the country's economic policies'. IMF Deputy Managing Director Bo Li acknowledged that 'growth has slowed amid domestic protests and heightened energy-security risks following sanctions on the macro-critical oil company NIS', but praised the prudent macroeconomic policies and strong engagement with the IMF for helping Serbia build valuable fiscal and external buffers.