National Bank of Serbia reports IMF completion of Serbia’s second Policy Coordination Instrument review

The National Bank of Serbia published an update on the International Monetary Fund (IMF) Executive Board’s successful completion of the second review of Serbia’s economic programme under the Policy Coordination Instrument (PCI). The IMF’s assessment pointed to continued implementation of structural reforms, prudent macroeconomic policies, and reserve buffers that support the economy amid heightened challenges. The Executive Board highlighted Serbia’s high foreign exchange reserves and government deposits, alongside a resilient, well-capitalized banking sector, as key stabilizers, and noted that resolving the issue of sanctions affecting Serbia’s oil industry would reduce uncertainty. It also reported slower activity due to domestic and external pressures, with real gross domestic product growth of around 2% in 2025 and projections of 3% in 2026 and 4.6% in 2027, while inflation has fallen below the central value of the National Bank of Serbia’s 3% target. On fiscal policy, the IMF projected the deficit to remain below the agreed limit of 3% of gross domestic product, supported by controlled current spending, adherence to fiscal rules for public sector wages and pensions, and prioritised investment. The National Bank of Serbia’s Governor Jorgovanka Tabakovic highlighted record foreign exchange reserves, a relatively stable dinar-euro exchange rate, and higher gold reserves that now account for about 20% of total foreign exchange reserves, alongside a low share of non-performing loans. The update also noted that the current PCI was approved on 9 December 2024 for 36 months, is advisory and does not provide financing, and is reviewed on a semi-annual basis.