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

December 21, 2018

  • The implementation of Serbia’s economic program is largely on track.
  • The 2019 budget safeguards the major fiscal adjustment made in recent years and foresees a further decline in public debt.
  • Serbia is committed to advancing structural reforms needed to foster private sector-led growth and faster convergence towards EU income levels.

On December 21, 2018, the Executive Board of the International Monetary Fund (IMF) completed the first review under the Policy Coordination Instrument (PCI) [1] for the Republic of Serbia. The Executive Board’s decision was taken without a meeting. [2]

Serbia is the second IMF member country to request a PCI. It was approved on July 18, 2018 (see Press Release No. 18/299 ) and aims to maintain macroeconomic and financial stability, while advancing an ambitious reform agenda to foster rapid growth, job creation and improved living standards.

Serbia’s strong economic performance continues, supported by the recovery of private consumption and robust foreign direct investments (FDI) and exports. Economic growth is projected at 4.2 percent in 2018 (partly reflecting a rebound from the effects of drought in 2017) and 3½ percent in 2019. Program implementation is broadly on track. Inflation remains below the mid-point of the National Bank of Serbia’s (NBS) inflation band, while the NBS has kept interest rates on hold since April. Bank lending growth and private sector wages are strengthening. Fiscal performance remains sound, modernization of the tax administration has accelerated, and public debt has fallen sharply. The Serbian dinar has remained broadly stable against the euro, with the NBS refraining from significant intervention in the exchange rate as appreciation pressures have eased in recent months.

The 2019 budget safeguards the major fiscal adjustment made in recent years and foresees a further decline in public debt, while accommodating higher investment spending and unwinding of crisis-era temporary measures. Steps to increase the use of the Serbian dinar in bank lending and deposits, and reduce reliance on the euro, are gradually yielding results. The authorities are committed to making further progress on structural reforms in 2019, which are needed to foster private sector-led growth and ensure Serbia is put on a faster convergence towards EU income levels. Their plans include measures to reduce the size of the shadow economy, strengthen public administration, as well as reform and restructure state-owned utilities, enterprises, and financial institutions.


[2] The Executive Board takes decision without a meeting (based on lapse-of-time procedures) when it is agreed by the Board that a proposal can be considered without convening formal discussions.

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