IMF Executive Board Concludes First Review of Stand-By Arrangement with Serbia

IMF (Shutterstock)

On June 28, the executive directors’ board of the International Monetary Fund (IMF) convened in Washington, DC, and concluded its first review of the Stand-By Arrangement with the Republic of Serbia, Serbia’s Ministry of Finance announced later that day.

The IMF determined that Serbia has successfully been implementing the agreed upon economic program and has managed to preserve the country’s macroeconomic stability amidst an economically volatile international environment.

“Over the last decade, Serbia has, despite external shocks, achieved impressive economic results reflecting its strong economic policies. Such policies supported strong growth, low inflation, and declining public debt,” the Fund said in a June 28 press release.

The statement further said that, owing to said policies, incomes and employment rates in the country have increased, while poverty has dropped. Meanwhile,  “large and diversified” foreign direct investments have “more than covered the current account deficit.” “The Covid-19 pandemic affected growth, but the economy quickly recovered in 2021 with the support of a strong package of policy measures,” the IMF stated.

The Fund went on to mention that problems with the country’s energy sector and the reverberations of war in Ukraine both adversely affected Serbia’s economy, leading to higher-than-anticipated inflation, but that it is expected for the inflation rate to fall to eight percent by the end of the year and return to within the National Bank of Serbia’s target band in 2024.

Serbia still needs to reform its energy sector, the IMF said, asserting that the new draft bill on public enterprises aligns with the “best practices” of the Organization for Economic Cooperation and Development (OECD) and “provides a strong foundation for governance reform in the energy sector and beyond.”

Worth EUR2.4 billion, Serbia’s stand-by arrangement with the IMF was finalized last October, when it replaced the then-active Policy Coordination Instrument. The current arrangement is valid for two years and, having taken effect in December 2022, expires at the end of 2024.