NBS: Third IMF review under PCI-backed economic programme deemed successful

BELGRADE - The International Monetary Fund (IMF) Executive Board has concluded that a third review of the implementation of an economic programme supported by the Policy Coordination Instrument (PCI) for Serbia has been successful, the National Bank of Serbia (NBS) announced on Monday.

"Given Serbia’s economic policy measures and strong macroeconomic performance, the decision was made without convening a formal Board meeting, a possibility used when assessed that a formal discussion is not needed," the central bank said in a statement.

"The IMF Executive Board noted, inter alia, that the performance under the agreed economic programme remains robust:

- the implementation of structural reforms progresses well,

- all reform targets have been completed on schedule,

- all quantitative targets for end-2025 have been met.

The IMF states that the Serbian economy has remained resilient despite intensified external headwinds. Strong economic fundamentals enable Serbia to cope with these headwinds even if the Middle East conflict proves prolonged. A broadly aligned external position, moderate public debt, high FX reserves and a well-capitalised banking system should help the economy navigate these challenges.

The IMF points out the following when it comes to Serbia’s key economic indicators:

- Despite intensifying external and domestic headwinds, Serbia’s economy has remained resilient.

- Economic activity strengthened in early 2026. Growth is projected to stay strong in 2026 and to accelerate to 4 pct in 2027.

- Headline inflation remained moderate and within the NBS’s tolerance band.

- FX reserves stayed at exceptionally high levels.

- The banking sector remains sound, supported by strong capitalisation, liquidity and profitability.

- The IMF also highlights the reforms that should remain a focus in the period ahead, including the already identified reforms in the energy sector, as well as reforms aimed at supporting Serbia’s transition to a higher value-added growth model. Temporary measures adopted in response to numerous external risks should, if necessary, be accompanied by a reprioritisation of current and capital spending. Fiscal policy should remain anchored by the 3 pct of GDP deficit ceiling in 2026–2027 and by adherence to the fiscal rules governing public sector wages and pensions. Monetary policy should remain restrictive and be tightened further if inflation expectations increase," it said.

"The successful completion of the third review of the PCI-supported economic programme is yet another proof that Serbia continues to pursue sound economic policies," NBS Governor Jorgovanka Tabakovic said.

"- Y-o-y inflation has been moving around the 3 pct target band midpoint since September 2025, standing at 3.5 pct in May.

- We have also preserved the relative stability of the dinar against the euro, despite pronounced volatility, uncertainty and unpredictability in global financial and commodity markets.

- The country’s record-high FX reserves, amounting to 29.9 bln euros at end-May 2026, remain a guarantee of security and stability going forward. Indicators of reserve adequacy, such as the coverage of approximately seven months of imports of goods and services, point to a more than adequate level of reserves.

Taken together, these factors – including a stable, resilient and well-capitalised banking sector, with the record-low share of NPLs – will continue to provide significant support to the resilience of our economy in the period ahead," Tabakovic also said.