IMF Reaches Third Review Agreement with Serbia, Forecasts Moderate Inflation Rise

An International Monetary Fund (IMF) team visiting Serbia concluded a team‑level agreement on a third review under the IMF’s Policy Coordination Instrument, which now awaits approval by the IMF Executive Board. The Fund projects that Serbia’s average inflation will be about 3.5% in 2026, temporarily exceeding the National Bank of Serbia’s target band before returning to range in mid‑2027. Higher global energy and commodity prices are cited as the main drivers. The IMF recommends phasing out the fuel‑tax cuts introduced in March‑April 2026 to safeguard fiscal sustainability. Economic growth is expected to pick up compared with 2025, though it may be dampened by spill‑over effects of the Middle‑East conflict in 2026, while 2027 activity should benefit from Expo‑related consumption. Monetary policy is urged to remain cautious and possibly tighten if energy costs become entrenched in inflation expectations. Serbian authorities reaffirm a commitment to keep the fiscal deficit at 3% of GDP in 2026‑27, maintain special fiscal rules on public‑sector wages and pensions, and advance structural reforms and transparent cost‑benefit analysis for public investments.