“Serbia's Economy is Stable” - IMF Report: Risks Remain Present
Serbia's economy remains resilient amid disruptions caused by the war in the Middle East, with downside risks high, the International Monetary Fund (IMF) said. After growing by 2% in 2025, Serbia's economy is expected to grow by 2.8% this year, 4% in 2027 and 3.5% in 2028.
According to the IMF, Serbia's fiscal deficit should not exceed 3% of GDP for the years 2025-2027. Fiscal risks have increased, stemming not only from the energy shock, but also from pressures related to the public enterprise Roads of Serbia (RoS) and the City of Belgrade, the IMF noted.
Measures to ease the impact of higher energy prices should be temporary and targeted. Fuel excise tax cuts that Serbia introduced in March to cushion the impact of rising global oil prices should be phased out by July if oil prices remain near current levels, as long-term fuel subsidies are costly and inefficient, the IMF said.
The cost of temporary support should be covered within existing budget limits by reallocating spending. If energy prices remain high, any additional assistance should be focused on vulnerable households, while preserving funds for key investment projects.
The IMF also said that monetary policy should remain tight and be tightened further if inflation expectations rise, second-round effects emerge, or inflation remains above the upper limit of the central bank's 1.5-4.5% tolerance range. The IMF projects Serbia's inflation to be 5% at the end of 2026, 3.9% at the end of 2027, and 3% at the end of 2028.
Energy sector reform is becoming increasingly important due to rising energy security risks and high prices, the IMF said. Strengthening state-owned energy companies is key to supporting investment, energy security, and fiscal stability. Restructuring at the state-owned electricity producer EPS needs to be accelerated, while progress on cost-reflective electricity tariffs and improving bill collection remains essential for the financial health of the sector.
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