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The Government of the Republic of Serbia

In the service of citizens

Serbia successfully completes arrangement with IMF

Belgrade, 8 January 2021

The National Bank of Serbia (NBS) announced that the Board of Executive Directors of the International Monetary Fund (IMF) has made a decision on the successful completion of the fifth, last review of the results of the economic program of the Republic of Serbia.

The programme supported by the Policy Coordination Instrument (PCI) was approved to Serbia in July 2018 for a period of 30 months, is of an advisory nature and did not envisage the use of financial resources.

The Board of the International Monetary Fund assessed that its implementation was successful during the entire duration of the program.

Sufficient progress has been made in meeting the goals of structural reforms. The International Monetary Fund forecasts economic growth in Serbia of 5% in 2021 and 4.5% in 2022, with high and sustainable growth in the medium term.

The Board of the International Monetary Fund estimates that monetary policy measures and a large fiscal package played an important role in supporting the domestic economy and rapid recovery.

The measures were assessed as well-designed and in the right way aimed at protecting citizens and supporting households, preserving jobs, greater investments in health care, providing sufficient liquidity in the banking system and easier repayment of loan obligations.

The Board of the International Monetary Fund also states that low inflation has been preserved in Serbia, and expects that inflation will remain under the control of the National Bank of Serbia in 2021, and in the medium term.

For this year, it projects average inflation at the level of 1.9 percent, as well as its gradual approach to the central value of the target in the medium term.

According to the International Monetary Fund, a fiscal deficit of 3 percent of gross domestic product in 2021 will ensure that the share of public debt in gross domestic product is reduced, while creating enough space to support economic recovery, including greater capital investment.

It is pointed out that there is still uncertainty regarding the course of the coronavirus pandemic on a global level.

The Board of the International Monetary Fund points out that in the forthcoming period, the priorities remain related to the continuation of structural and institutional reforms.

Medium-term priorities include developing capital markets, improving governance, and strengthening the rule of law.

In the medium term, the International Monetary Fund projects dynamic growth that has a good structure.

Also, the IMF expects the continuity of low inflation, growth of exports and foreign exchange reserves of Serbia, the fiscal framework, which at the same time provides a reduction in the share of public debt in gross domestic product and support to the economy, including growth of capital investments.

The International Monetary Fund also expects that Serbia will continue to justify investor confidence, which is also reflected in the projected high inflows of foreign direct investments, the statement said.