IMF: Agreement on Third Review reached with Serbia, moderate inflation growth expected

IMF staff, which has recently visited Serbia, and the Serbian authorities have reached “staff-level agreement on the Third Review under the Fund’s Policy Coordination Instrument (PCI) subject to approval by the IMF Executive Board.”

According to the IMF’s press release following the visit, driven by higher global energy and commodity prices, inflation is projected to rise moderately and temporarily exceed the upper bound of the NBS tolerance band at the end of 2026 before returning to the band by mid-2027.

According to IMF projections, average inflation in Serbia in 2026 is expected to be around 3.5%. The National Bank of Serbia (NBS) is targeting inflation of 3% plus/minus 1.5 percentage points this year.

– Fuel excise reductions introduced in March–April 2026 have cushioned the oil price shock but should be withdrawn in the near term to avoid prolonged energy subsidization and safeguard fiscal sustainability – IMF staff recommends.

Growth will increase from 2025 but will be adversely affected by spillovers from the war in the Middle East in 2026, according to IMF projections. In 2027, economic activity will be supported by EXPO-related spending.

– Monetary policy should stay cautious and may need to tighten if higher energy costs feed into long-term inflation expectations and trigger second-round effects – the press release says.

According to IMF staff, the authorities are committed to a fiscal deficit ceiling of 3% of GDP in 2026–27 and to special fiscal rules on public wages and pensions.

The authorities, as added, are advancing fiscal-structural reforms, and systematic application of transparent cost-benefit analysis to all new public investment projects is a priority.

– Faster progress in improving the business environment is needed to strengthen medium-term growth – the press release points out.

Međunarodni monetarni fond-MMF Beograd

Narodna banka Srbije Beograd

International Monetary Fund

IMF

National Bank of Serbia

NBS