IMF and Serbia Forge Path for Economic Stability with New Agreement

The International Monetary Fund (IMF) and Serbia have finalized a staff-level agreement under a 36-month arrangement aimed at bolstering economic reforms in the Balkan nation, as announced on Thursday.

This Policy Coordination Instrument, initiated in October 2024, is designed to facilitate Serbia's access to external funding sources.

The agreement stipulates that Serbia should adhere to a fiscal deficit limit of 3% of its GDP over the course of three years. Approval by the IMF Executive Board is pending following their Serbia visit.

Serbia has experienced prolonged anti-government protests following the tragic collapse of a railway station roof last year, which led to accusations of corruption and negligence.

Evidently, Serbia's economic growth has decelerated this year, hindered by global trade tensions, domestic political instability, and U.S. sanctions on the NIS oil company.

Despite unfavorable harvest conditions causing an increase in food prices, overall inflation decreased to 2.9% in September after transient price and margin regulations. Economic growth is forecasted to reach 2.1% in 2025, with a substantial recovery to around 3% anticipated for 2026, leveraging investments, exports, and improved household incomes.

The IMF emphasized that Serbia's foreign exchange reserves remain substantial and governmental debt levels are manageable.