The International Monetary Fund (IMF) said that Serbia had successfully completed the first review of its economic program, supported by the Policy Coordination Instrument (PCI), the National Bank of Serbia said on Monday in a press release.

“In light of effective implementation of economic policy measures and good macroeconomic results, the Board made the decision without an official meeting, which is a possibility used when assessed that a formal discussion is not needed,” the press release said.

According to the IMF Executive Board, “vigorous economic recovery is underway in Serbia, supported by a large-scale and timely policy response and strong precrisis growth momentum”. “Already in Q1 2021, Serbia’s GDP exceeded its pre-crisis level. The IMF now projects even higher than initially forecast growth in 2021 and unchanged growth of 4.5% in 2022,” it said.

The IMF report said that the banking sector is assessed as well-capitalized and liquid and the financial system is healthy – as shown by all indicators, while the development of the capital market and continued dinarisation will serve as an important support to medium-term growth.

“The IMF Executive Board expects that inflation will return to the lower half of the target tolerance band in H2 2022, when the effects of the drought from this year will wane and energy prices will stabilise,” the press release said.

The IMF said that the 2022 budget is well-balanced, “envisaging: (1) further narrowing of the fiscal deficit to 3% of GDP; (2) moderate growth in public sector wages and pensions; and (3) continued high capital investment” with generally balanced risks.
“The medium-term macroeconomic framework that the IMF projects for Serbia is pretty good and realistic. The framework projects medium-term growth of 4–4.5% and sustainable public finances, along with the improvement of all fiscal parameters,” it said.