IMF: City of Belgrade among risks to Serbia’s fiscal stability

The Executive Board of the International Monetary Fund (IMF) has announced that, although the Serbian economy is showing resilience, there are risks that could threaten the country’s fiscal stability.

In the report on the third review of the current arrangement with Serbia (Policy Coordination Instrument – PCI), the IMF points out that fiscal risks in Serbia are elevated and stem not only from the energy shock, but also from pressures related to the PE Roads of Serbia and the City of Belgrade, Beta reported.

The IMF believes that maintaining the fiscal deficit within the limit of three percent of GDP may require the implementation of contingency plans, which includes rationalizing current spending and strictly prioritizing investment projects.

It is pointed out that the PE Roads of Serbia’s debts must be permanently resolved through stricter expenditure control, as well as an urgent assessment of the financial position of the City of Belgrade in order to mitigate fiscal risks before the next budget cycle.

The IMF calls for work to strengthen the financial position of state-owned energy companies in order to create space for necessary investments and reduce fiscal risks.

It is recommended to accelerate the restructuring of Elektroprivreda Srbije (EPS), which includes timely rationalization of the workforce and the establishment of stronger governance ahead of planned large-scale investments.

An additional problem, according to the IMF, is the chronic non-payment of energy bills, especially by state-owned companies and local governments, which must be decisively addressed to ensure the financial sustainability of the sector.

All measures introduced to mitigate the impact of the energy price shock, as the IMF emphasizes, should remain temporary and targeted, so the recent reduction in fuel excise duties should be gradually eliminated by July 2026 if oil prices remain stable.

If pressures on the energy market persist, it is recommended that any additional support should be well targeted to vulnerable households.

Međunarodni monetarni fond-MMF Beograd

Grad Beograd

JP Putevi Srbije Beograd

Elektroprivreda Srbije ad Beograd

IMF

City of Belgrade

Roads of Serbia

EPS

fiscal stability

arrangement

third review