Author: MIL-OSI Publisher

Source: IMF – News in Russian

June 30, 2025

• Serbia’s prudent macroeconomic policies have supported economic resilience in an uncertain global environment. After a brief slowdown in early 2025, growth is expected to reaccelerate in 2026 and 2027.
• The authorities are maintaining fiscal discipline and implementing macro-critical structural reforms under the Policy Coordination Instrument, having completed the first review. While Serbia faces domestic and external uncertainties, it has built strong buffers to withstand potential shocks.
• Reinvigorating reforms to improve the business environment and governance would help sustain Serbia’s strong growth over the medium term.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV Consultation with the Republic of Serbia and completed the first review of Serbia’s performance under the Policy Coordination Instrument (PCI).[1] The authorities have consented to the publication of the Staff Report prepared for the consultation and the review.[2]

Serbia’s macroeconomic performance remains resilient amid a challenging global environment. IMF staff projects real GDP growth at 3 percent in 2025, rising to 4 percent in 2026 and 4.5 percent in 2027. Headline inflation has returned to National Bank of Serbia’s target band (3 percent +/-1.5 percentage points), driven by declining energy prices and moderating core inflation. The monetary policy stance is appropriately restrictive.

Despite increased public investment, the fiscal deficit remains under control due to strong revenue performance and prudent management of current spending. While the current account deficit has widened, reflecting higher imports supporting the public investment drive and weak external demand, international reserves remain ample.

Fiscal structural reforms are progressing, including in further strengthening public financial management and public investment management. Energy sector reforms are also advancing but more remains to be done to ensure financial sustainability and operational efficiency in state-owned energy enterprises. Reinvigorating reforms to strengthen the business environment and improve governance is important for supporting Serbia’s growth rates over the medium term.

Downside risks to the outlook are elevated. A global slowdown and further geoeconomic fragmentation could weigh on exports and foreign direct investment. Domestically, heightened political tensions could erode consumer and investor confidence. But Serbia is well-positioned to manage potential shocks— international reserves and government deposits are high, public debt is declining, and banks are well-capitalized and liquid.

At the conclusion of the Board discussion on the Republic of Serbia, Ms. Gita Gopinath, First Deputy Managing Director, made the following statement:

“Serbia’s prudent macroeconomic policies and strong engagement with the IMF have delivered impressive results. Growth has been resilient, and fiscal and external buffers have strengthened. Reflecting these accomplishments, Serbia received its first-ever investment grade sovereign rating in 2024. Under the Policy Coordination Instrument (PCI), the Serbian authorities have continued their commitment to sound economic policies and structural reforms.

“In light of easing inflation and heightened domestic and external challenges, the planned fiscal expansion focused on growth-enhancing investment, can help cushion the near-term slowdown while boosting medium-term growth. Fiscal policy anchored to the deficit target, which safeguards hard-earned fiscal credibility and contains pressures on current spending, is critical. As the current investment cycle winds down, gradual fiscal consolidation is needed to rebuild buffers against external shocks. Advancing fiscal structural reforms remains essential, particularly to strengthen public financial management, enhance governance and transparency in public investment management, and address emerging fiscal risks.

“A restrictive monetary policy stance remains appropriate until disinflation is firmly sustained. While banks have been resilient and systemic risks remain contained, financial intermediation would benefit from additional improvements in regulatory and supervisory frameworks, including by closer alignment with EU standards. Continued progress on strengthening AML/CFT is also important.

“Further energy reforms remain crucial for securing sustainable and stable energy supplies. Increases in grid fees and electricity tariffs would improve cost recovery and the financial strength of energy state-owned enterprises and allow for investment in a more diversified and less carbon-intensive energy mix.

“Serbia faces medium-term challenges including from population aging. Enhancing productivity will be critical to sustaining income convergence with advanced economies. This will require structural and governance reforms to attract higher value-added FDI and domestic private investment to support growth. Improving the business environment will require measures to enhance commercial judicial frameworks, foster innovation, and strengthen governance.”

 

Executive Board Assessment[3]

Executive Directors agreed with the thrust of the staff appraisal. They commended Serbia’s prudent macroeconomic policies and strong commitment to reforms and welcomed the satisfactory performance under the Policy Coordination Instrument. Noting the heightened domestic and external risks to the outlook, Directors emphasized the importance of sustaining fiscal discipline, rebuilding buffers to shocks, and increasing productivity to support more sustainable growth.

Directors underscored that a fiscal deficit of 3.0 percent of GDP or lower would allow for priority investment spending, while preserving hard won credibility. They recognized the authorities’ commitment to adhere to the wage and pension special fiscal rules, which should help to keep public debt firmly on a downward path and support investor confidence. Directors welcomed the focus on ensuring transparent, accountable, and efficient government operations. Measures to improve public financial and investment management and fiscal risk management will help to maintain fiscal discipline, while ensuring the delivery of quality public investment. Directors also underscored the need to strengthen tax administration capacity. They welcomed the authorities’ commitment to addressing domestic arrears and preventing the accumulation of new arrears.

Directors agreed on the need to maintain a monetary policy tightening bias to achieve sustained disinflation. While noting that the banking sector has been resilient and systemic risks remain contained, Directors stressed the need for continued efforts to enhance regulatory and supervisory frameworks, including through closer alignment with EU standards. Continued efforts to strengthen AML/CFT frameworks are also important.

Directors highlighted that energy sector reforms remain essential to secure sustainable and stable energy supplies and support decarbonization. Accordingly, they welcomed the authorities’ commitment to strengthen the financial viability of energy state owned enterprises and support investment in a more diversified energy mix. In this regard, ensuring cost recovery through increased household electricity tariffs is important.

Directors agreed that ambitious structural and governance reforms are critical to achieving strong and sustainable medium term growth. Noting the impact of the aging population, Directors stressed the need to enhance employment opportunities for women and youth and to ensure better matching of skills with evolving labor market demands. They also supported intensified efforts to improve the business environment, including by enhancing commercial judicial frameworks, fostering innovation, and improving governance. Continued efforts to reduce corruption are important.

It is expected that the next Article IV consultation with the Republic of Serbia will be held on the 24-month cycle.

Serbia:  Selected Economic and Social Indicators, 2024–27 2024 2025 2026 2027 Est. PCI Request Proj. PCI Request Proj. PCI Request Proj. Output Real GDP growth (%) 3.8 4.2 3.0 4.2 4.0 4.5 4.5       Employment       Unemployment rate (labor force survey) (%) 8.6 8.5 8.5 8.4 8.4 8.3 8.3       Prices       Inflation (%), end of period 4.3 3.4 3.3 3.3 3.2 3.2 3.2       General Government Finances       Revenue (% GDP) 40.9 41.2 40.9 40.9 40.4 40.9 40.1 Expenditure (% GDP) 42.9 44.2 43.9 43.9 43.4 43.9 43.1 Fiscal balance (% GDP) -2.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 Public debt (% GDP) 47.5 47.7 46.8 46.9 46.5 46.4 46.4       Money and Credit       Broad money, eop (% change) 13.6 8.0 7.8 7.8 8.0 8.3 8.8 Credit to the private sector, eop (% change) 1/ 8.5 7.9 9.3 5.7 9.6 9.2 10.5       Balance of Payments       Current account (% GDP) -4.7 -5.1 -5.4 -5.2 -5.6 -5.5 -4.5 FDI (% GDP) 5.6 5.1 4.4 4.8 4.8 4.7 4.4 Reserves (months of prospective imports) 7.3 6.6 7.0 6.3 6.5 5.9 6.5 External debt (% GDP) 61.9 60.3 61.3 58.7 59.3 55.9 54.8       Exchange Rate       REER (% change) 2.3 … … … … … …      Sources: Serbian authorities and IMF staff estimates.  1/ Calculated at a constant exchange rate to exclude the valuation effects.

[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Serbia page.

[3] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

https://www.imf.org/en/News/Articles/2025/06/30/pr-25228-serbia-imf-concludes-2025-art-iv-consult-completes-1st-rev-policy-coor-instrument

MIL OSI

Source: IMF – News in Russian

June 30, 2025

• The IMF Board today completed the Eighth Review of the Extended Arrangement under the Extended Fund Facility (EFF) for Ukraine, enabling a disbursement of about US$0.5 billion (SDR 0.37 billion) to Ukraine, which will be channeled for budget support.
• Ukraine’s economy remains resilient, and the authorities met all end-March and continuous quantitative performance criteria, the prior action, and two structural benchmarks for the review.
• Despite the challenges, progressing with domestic revenue mobilization, strengthening the investment climate, improving governance, and completing the debt restructuring strategy are necessary to restore fiscal and debt sustainability and support growth. The full and timely disbursement of external support during the program period remains indispensable for macroeconomic stability

Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the Eighth Review of the EFF, enabling the authorities to draw US$0.5 billion (SDR 0.37 billion, which will be channeled for budget support. This will bring the total disbursements under the IMF-supported program to US$10.6 billion.

Ukraine’s 48-month EFF, with access of SDR 11.6 billion (equivalent to about US$15.5 billion, or 577 percent of quota), was approved on March 31, 2023, and forms part of an international support package totaling US$152.9 billion in the program’s baseline scenario. Ukraine’s IMF-supported program helps anchor policies that sustain fiscal, external, and macro-financial stability at a time of exceptionally high uncertainty. The EFF aims to support Ukraine’s economic recovery, enhance governance, and strengthen institutions with the aim of promoting long-term growth and investment.

For the Eighth Review, Ukraine met all end-March and continuous quantitative performance criteria as well as the prior action to submit to the Cabinet of Ministers of Ukraine a detailed reform plan for the State Customs Service (SCS). Two structural benchmarks on tax reporting for digital platform operators and publication of the external audit of NABU were also completed. Four new benchmarks were also established, including: measures to update the single project pipeline; preparation of a prioritized roadmap for financial market infrastructure; implementation of international valuation standards; and development of legislative proposals to align securitization and bonds with international standards. The timelines of some other structural benchmarks, including the appointment of the head of the SCS, have been reset by the IMF Executive Board to allow the authorities more time to complete these important reforms. The authorities also requested a rephasing of access to IMF financing over the remainder of 2025 to better align them with Ukraine’s updated balance of payments needs, while the overall size of the program remains unchanged.   

The 2025 growth forecast has been maintained at 2–3 percent as a smaller electricity deficit is offset by lower gas production and weaker agricultural exports. Pressures from Russia’s war will require a supplementary budget for 2025, and the medium-term fiscal path has been revised to better reflect the authorities’ policy intentions on revenue mobilization and expenditure prioritization. The National Bank of Ukraine (NBU) has maintained a tight monetary policy to respond to the still high inflation, while inflation expectations remain anchored. FX reserves remain adequate, sustained by continued sizeable external support. Overall, the outlook remains subject to exceptionally high uncertainty.

Following the Executive Board discussion on Ukraine, Ms. Gita Gopinath, First Deputy Managing Director of the IMF, issued the following statement[1]:

“Russia’s war continues to take a devastating social and economic toll on Ukraine. Nevertheless, macroeconomic stability has been preserved through skillful policymaking as well as substantial external support. The economy has remained resilient, but the war is weighing on the outlook, with growth tempered by labor market strains and damage to energy infrastructure. Risks to the outlook remain exceptionally high and contingency planning is key to enable appropriate policy action should risks materialize.

“The Fund-supported program remains fully financed, with a cumulative external financing envelope of US$153 billion in the baseline scenario and US$165 billion in the downside scenario, over the 4-year program period. This includes the full utilization of the approximately US$50 billion from the G7’s Extraordinary Revenue Acceleration Loans for Ukraine (ERA) initiative. Full, timely, and predictable disbursement of external support—on terms consistent with debt sustainability—remains essential to achieving program objectives.

“The continuing war has necessitated a Supplementary Budget for 2025. Restoring fiscal sustainability and meeting elevated priority expenditures over the medium term will require continued decisive efforts to implement the National Revenue Strategy. This includes modernization of the tax and customs services (including the timely appointment of the customs head), reduction in tax evasion, and harmonization of legislation with EU standards. These reforms, combined with improvements in public investment management frameworks, medium-term budget preparation, and fiscal risk management, are critical to underpinning growth and investment. 

“The authorities continue working to complete their debt restructuring strategy in line with the program’s debt sustainability objectives, which is essential to create room for priority expenditures, reduce fiscal risks, and restore debt sustainability.

“Given still elevated inflation, the tight monetary policy stance is appropriate, and the NBU should stand ready to tighten further should inflation expectations deteriorate. Greater exchange rate flexibility will help strengthen economic resilience while safeguarding reserves.

“The financial sector remains stable, though vigilance is needed given heightened risks. Operational and governance weaknesses in the security markets regulator need to be tackled urgently. Closing gaps in Ukraine’s capital markets infrastructure will be key to attracting foreign private capital for post-war reconstruction.

“Sustained progress in anticorruption and governance reforms remains crucial. The completed audit of the National Anti-Corruption Bureau is an important step; additional efforts are required, including amending the criminal procedures code, appointing the new head of the Economic Security Bureau, and strengthening AML/CFT frameworks.”

Table 1. Ukraine: Selected Economic and Social Indicators, 2021–27
		2021		2022			2023		2024		2025		2026		2027
		Act.		Act.			Act.		Proj.		Proj.		Proj.		Proj.
Real economy (percent change, unless otherwise indicated)
Nominal GDP (billions of Ukrainian hryvnias) 1/		5,451		5,239			6,628		7,659		8,866		10,192		11,322
Real GDP 1/		3.4		-28.8			5.5		2.9		2-3		4.5		4.8
Contributions:
Domestic demand		12.8		-19.0			11.9		3.8		5.2		3.4		2.7
Private consumption		4.5		-19.0			3.0		4.6		2.8		3.4		2.7
Public consumption		0.1		5.6			3.0		-1.5		0.3		-2.5		-2.0
Investment		8.1		-5.5			5.8		0.6		2.1		2.5		2.0
Net exports		-9.3		-9.8			-6.3		-0.8		-3.2		1.1		2.1
GDP deflator		24.8		34.9			19.9		12.3		13.5		10.0		6.0
Unemployment rate (ILO definition; period average, percent)		9.8		24.5			19.1		13.1		11.6		10.2		9.4
Consumer prices (period average)		9.4		20.2			12.9		6.5		12.6		7.6		5.3
Consumer prices (end of period)		10.0		26.6			5.1		12.0		9.0		7.0		5.0
Nominal wages (average)		20.8		1.0			20.1		23.1		17.4		13.7		10.8
Real wages (average)		10.5		-16.0			6.4		15.6		4.2		5.7		5.3
Savings (percent of GDP)		12.5		17.0			12.8		11.4		4.4		10.0		18.3
Private		12.7		30.2			27.4		23.3		21.4		15.9		18.0
Public		-0.2		-13.1			-14.6		-11.8		-17.1		-5.9		0.3
Investment (percent of GDP)		14.5		12.1			18.1		18.6		20.9		22.6		23.7
Private		10.7		9.6			13.4		13.3		16.6		18.3		18.9
Public		3.8		2.5			4.7		5.4		4.3		4.3		4.9
General Government (percent of GDP)
Fiscal balance 2/		-4.0		-15.6			-19.3		-17.2		-21.3		-10.1		-4.6
Fiscal balance, excl. grants 2/		-4.0		-24.8			-25.8		-23.1		-22.1		-10.4		-5.6
External financing (net)		2.5		10.7			16.2		15.0		24.5		8.9		1.7
Domestic financing (net), of which:		1.5		5.0			3.1		0.3		-3.1		1.3		2.8
NBU		-0.3		7.3			-0.2		-0.2		-0.1		-0.1		-0.1
Commercial banks		1.4		-1.5			2.5		2.9		2.7		0.8		3.4
Public and publicly-guaranteed debt		48.9		77.7			81.2		89.7		108.6		110.4		106.4
Money and credit (end of period, percent change)
Base money		11.2		19.6			23.3		7.7		21.7		13.1		10.4
Broad money		12.0		20.8			23.0		13.4		14.4		13.2		10.4
Credit to nongovernment		8.4		-3.1			-0.5		13.5		10.6		17.7		18.6
Balance of payments (percent of GDP)
Current account balance		-1.9		4.9			-5.3		-7.2		-16.5		-12.6		-5.4
Foreign direct investment		3.8		0.1			2.5		1.8		2.2		4.0		5.0
Gross reserves (end of period, billions of U.S. dollars)		30.9		28.5			40.5		43.8		53.4		52.8		55.6
Months of next year’s imports of goods and services		4.5		3.8			5.3		5.1		6.3		6.3		6.5
Percent of short-term debt (remaining maturity)		74.4		83.3			100.3		130.9		178.9		171.5		172.1
Percent of the IMF composite metric (float)		105.5		110.3			130.2		125.4		125.5		114.0		115.7
Goods exports (annual volume change in percent)		39.0		-37.5			-8.5		16.8		3.0		14.9		14.3
Goods imports (annual volume change in percent)		15.1		-29.7			18.5		6.0		19.3		4.7		5.5
Goods terms of trade (percent change)		-8.4		-11.6			3.6		0.5		1.3		1.0		0.4
Exchange rate
Hryvnia per U.S. dollar (end of period)		27.3		36.6			38.0		42.0		…		…		…
Hryvnia per U.S. dollar (period average)		27.3		32.3			36.6		40.2		…		…		…
Real effective rate (CPI-based, percent change)		2.6		3.2			-6.7		-6.5		…		…		…
Memorandum items:
Per capita GDP / Population (2017): US$2,640 / 44.8 million
Literacy / Poverty rate (2022 est 3/): 100 percent / 25 percent perpercentpercent
Sources: Ukrainian authorities; World Bank, World Development Indicators; and IMF staff estimates.
1/ GDP is compiled as per SNA 2008 and excludes territories that are or were in direct combat zones and temporarily occupied by Russia (consistent with the TMU).
2/ The general government includes the central and local governments and the social funds.
3/ Based on World Bank estimates.

[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summing up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

https://www.imf.org/en/News/Articles/2025/06/30/pr-25227-ukraine-imf-completes-8th-rev-of-ext-arrang-under-eff

MIL OSI