IMF Staff Country Reports

This paper presents Republic of Serbia’s Second Review under the Policy Coordination Instrument and Request for Modification of Quantitative Targets. Serbia’s growth has slowed amid rising domestic and external headwinds. Growth in 2025 is expected to be around 2 percent, before recovering in 2026 and 2027. Prudent macroeconomic policies and strong buffers are helping Serbia navigate this challenging period. Fiscal discipline is being strictly maintained, and monetary policy remains cautious, preserving policy credibility. Under the Policy Coordination Instrument, the authorities are advancing key structural reforms, including in public financial and investment management and energy sector, and have successfully completed the second review. Energy-sector reforms remain critical amid risks to energy security. Diversifying natural gas sources would further strengthen Serbia’s energy supplies. Recent increases in household electricity tariffs have improved the financial position of state-owned energy enterprises. Indexing future tariff increases to inflation would further support cost recovery and enable investment in a more diversified energy mix.