SARAJEVO, May 6 (Reuters) – The International Monetary Fund and Serbia have reached a staff-level agreement on the third review under a 36-month arrangement to help support economic reforms in the Balkan country, the IMF said on Wednesday.
The so-called Policy Coordination Instrument was signed in October 2024 to make it easier for Serbia to secure lending from other sources. The latest review, which checks that Belgrade is sticking to the original agreement, is subject to approval by the IMF Executive Board.
The IMF said that Serbia’s economic growth will increase to 2.75% this year but will be adversely affected by spillovers from the war in the Middle East. In 2027, it would grow 4%, supported by EXPO-related spending, real income gains, new export capacities in the manufacturing sector, recovering agricultural output, and infrastructure and energy investment.
Inflation is projected to rise moderately to 3.5% in 2026 and 4.5% in 2027, driven by higher global energy and commodity prices, the Washington-based lender said in a statement after its mission’s visit. It said that monetary policy may need to tighten if higher energy costs feed into long-term inflation expectations and trigger second-round effects.
Under the arrangement, Serbian authorities are committed to a fiscal deficit limit of 3% of gross domestic product in 2026/2027 and to special fiscal rules on public wages and pensions.
“Fuel excise reductions introduced in March–April 2026 have cushioned the oil price shock but should be withdrawn in the near term to avoid prolonged energy subsidisation and safeguard fiscal sustainability,” the IMF said.
(Reporting by Daria Sito-Sucic; Editing by Kirsten Donovan)
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