IMF Praises Serbia’s Economic Recovery, Emphasizes Need for Continued Energy Reforms – Reuters

BELGRADE (Reuters) – The Serbian economy is demonstrating a positive recovery from last year’s energy challenges, according to a report from the International Monetary Fund (IMF) released on Tuesday, despite facing obstacles from the global and regional economic environments.

Following discussions with the Serbian government and central bank regarding the country’s financial situation, the IMF confirmed that the previously agreed €2.4 billion standby arrangement with Serbia is “on track.”

The IMF stated that Serbia’s economic prospects are contingent on geopolitical developments, changes in the energy sector, growth among trading partners, inflation trends, and fluctuations in global financial markets.

“The Serbian economy has considerable buffers against uncertainties and benefits from a robust, well-capitalized, and liquid banking system,” the IMF noted after conversations led by Donal McGettigan with Belgrade officials.

The IMF forecasts a 2% growth in Serbia’s gross domestic product (GDP) for 2023, with an anticipated increase to 3% in 2024. Additionally, inflation is expected to decline, aiming for approximately 8% by year-end and to return to the central bank’s target of around 3% (plus or minus 1.5 percentage points) in 2024.

The organization emphasized that Serbia’s 2024 budget, which aims for a deficit of 2.2% of GDP, aligns with a disciplined policy approach. However, the IMF cautioned that Serbia should ensure the sustainability of its electricity and gas pricing systems, making necessary adjustments to tariffs if there are increases in gas transit costs.

The IMF stressed that aggressively pursuing structural reforms, particularly within the energy sector, is vital for addressing Serbia’s vulnerabilities and supporting long-term growth.

The staff-level agreement reached between the IMF and Serbia requires approval from the IMF’s executive board, which is set to review the agreement in December.