IMF Serbian review complete

IMF Executive Board Completes the First Review Under the Policy Coordination Instrument for the Republic of Serbia


  • Program implementation is on track and the structural reform momentum has been broadly maintained.
  • With a robust economic recovery underway, Serbia’s real GDP is projected to grow 6.5 percent in 2021 and 4.5 percent in 2022.
  • The 2022 budget appropriately supports the economic recovery through high investment while also marking a gradual return to fiscal restraint.

    WASHINGTON, DC – December 20, 2021: The Executive Board of the International Monetary Fund (IMF) concluded the First Review Under the Policy Coordination Instrument (PCI) for the Republic of Serbia.1 The Executive Board’s decision was taken without a meeting.2

    The PCI was approved on June 18, 2021 (see Press Release No. 21/189) and aims at supporting the recovery from the pandemic, maintaining macroeconomic stability, and anchoring the medium-term fiscal policy framework, while pushing ahead with structural reforms to deliver more inclusive and sustainable growth.

    A strong economic recovery is underway, with Serbia’s real GDP growth projected to rebound to 6.5 percent in 2021 and reach 4.5 percent in 2022. GDP exceeded its pre-crisis level by the first quarter of 2021, and economic activity remained robust through the third quarter, supported by household consumption and investment. Swift policy actions—along with low reliance on tourism and other high-contact sectors, and strong growth momentum going into the crisis—have helped limit the pandemic’s negative effects on Serbia’s economy. However, Serbia remains vulnerable to spillovers from external developments, including a weaker-than- expected recovery in key European trading partners, supply chain disruptions, and rising energy prices globally. The quantitative and reform targets for end-June 2021 were met, as were the reform targets for end-September 2021, though with minor delays. The banking system has remained stable, liquid, and well capitalized.

    Headline inflation has been above the 4.5 percent upper limit of the National Bank of Serbia’s target band since September, but is expected to revert to the lower half of the inflation tolerance band in the second half of 2022 as the effects from this year’s drought wane and energy prices stabilize. In light of the rise in inflation and its uncertain outlook, the monetary authorities tightened monetary conditions in early October.

    1 The PCI is available to all IMF members that do not need Fund financial resources at the time of approval. It is designedfor countries seeking to demonstrate commitmentto a reform agendaor to unlockand coordinatefinancing from other official creditorsor private investors

    2 The Executive Board takes decisions under its lapse-of-time procedure when the Boardagrees that a proposal canbe considered without convening formal discussions

The 2022 budget envisages a reduction in the fiscal deficit to 3 percent of GDP, which will help ensure that public debt in percent of GDP resumes a clear downward path, while also continuing to support the recovery through high public investments.

page3image119257424 page3image119256080 page3image119258656

Sources: Serbian authorities; and IMF staff estimates and projections. 1/Unemploymentratefor workingagepopulation (15-64).
2/ Includes employer contributions.
3/ Includes amortization of called guarantees.


4/ Primary fiscal balance adjusted for the automatic effects of the output gap both on revenue and spending as well as one-offs.
5/ Excludes state guarantees on bank loans under the credit guarantee schemeintroduced in response to the COVID -19 crisis, estimated

at 1.1 percent of GDP as of August 15th, 2021.
6/ At constant exchange rates.
7/ After CR19/369, domestic securities held by non-residents are included in external debt. Historical data were updated since 2015.
8/ The risk-weighted metric is IMF’s ARA metric for the fixed exchange rate. Serbia was reclassified as stabilized exchange rate regime i n 2019.


Comments are closed.