IMF: Successful Completion of First Review of Serbia’s Economic Program, Results Better Than Expected

On June 28, the Executive Board of the International Monetary Fund (IMF) made a decision on successful completion of the first review of the results of the economic program of the Republic of Serbia, supported by the stand-by arrangement (SBA), and concluded regular consultations under Article IV of the IMF’s Articles of Agreement that were held with our country, according to the website of the National Bank of Serbia (NBS).

In making the decision, it was noted that the Republic of Serbia is successfully implementing the agreed economic program, it is added. All the criteria based on which the program results are monitored have been met. The achieved balance of payments and fiscal results outperformed the expectations, and the implementation of the structural reform agenda is advancing well.

In the current global conditions, it is expected that, with the continued implementation of a cautious monetary policy, y-o-y inflation will decline to around 8% by the end of the year and return within the NBS’s target tolerance band in 2024, it is added. Working in the same direction as the NBS’s measures will be the global tightening of financial conditions, a better than the last year’s agricultural season, the waning of the negative effects of supply-side shocks and the decline in primary commodity prices.

Consistent with all this, it is added, medium-term inflation expectations of the financial sector remained anchored. Fiscal policy is expected to stay relatively tight in 2023 as well, despite the additional measures in mid-2023. The projected fiscal deficit, which is not expected to exceed 3% of GDP in 2023, will support disinflation and further public debt reduction.

Međunarodni monetarni fond-MMF Beograd

Narodna banka Srbije Beograd

International Monetary Fund

IMF

National Bank of Serbia

NBS

Jorgovanka Tabakovic

economic program of Serbia

standby arrangement

year on year inflation

medium term inflation expectations

fiscal policy

monetary policy

direct investments

dinar exchange rate

FX reserves

gross domestic product