30.10.2025.

Talks with the IMF mission rounded off – monetary policy appropriate and underpinning Serbia’s macroeconomic stability

The IMF mission, led by Ms Annette Kyobe, and the Serbian delegation wrapped up their talks on Thursday, 30 October 2025. Staff-level agreement was reached about the second review under the Policy Coordination Instrument, pending approval by the IMF’s Executive Board.

The IMF mission has concluded that Serbia’s macroeconomic resilience positions the economy well for a rebound of growth once temporary shocks subside. The external and internal risks are cushioned by significant fiscal and external buffers, including high FX reserves and government deposits, a resilient banking sector, and moderate public debt. 

  • Following last year’s 3.9%, economic growth slowed in 2025, reflecting global trade tensions, protests, political uncertainty and sanctions imposed on NIS.
  • A weaker agricultural season reignited food price pressures. However, headline inflation eased to 2.9% y-o-y in September, partly due to temporary price and margin controls on food and household essentials.
  • Household consumption continues to be supported by rising disposable income. The banking sector remains stable and resilient, FX reserves ample, and public debt low.
  • Growth is projected to accelerate in 2026, driven by the continued increases in household disposable income, favourable credit conditions, new manufacturing export capacities and the resolution of NIS-related uncertainty surrounding energy supply.
  • A protracted resolution of NIS and domestic political tensions could impact economic activity. Still, these risks are cushioned by significant fiscal and external buffers, including high FX reserves and government deposits, a resilient banking sector and moderate public debt. The authorities are committed to resolving the NIS sanctions situation in a manner that ensures uninterrupted oil supply.
  • The current monetary policy stance remains appropriate and continues to underpin Serbia’s macroeconomic stability, including by looking through temporary price fluctuations. A continuation of prudent monetary policy is anticipated in the period ahead.
  • The current account deficit is projected to widen temporarily, driven by imports needed for key infrastructure projects, but FX reserves are expected to remain at comfortable levels.
  • Serbia is pursuing a range of critical energy investments, and given the sector’s significant financing needs, prioritising the most cost-effective projects will be key to strengthening both economic performance and energy security.
  • The authorities remain committed to maintaining a fiscal deficit ceiling of 3.0% of GDP during 2025-27 and to the special fiscal rules on public wages and pensions. 
    • Maintaining prudent macroeconomic policy is essential to safeguarding credibility, while preserving policy space to respond to potential shocks. The 3.0% of GDP ceiling on fiscal deficits – striking an appropriate balance between current spending needs and investments – is a fundamental policy anchor.
  • Serbia’s macroeconomic resilience positions the economy well for a rebound of growth once temporary shocks subside. 

In numerous meetings with the IMF representatives, Governor Tabaković underscored the following points:

  • Inflation amounted to 2.9% y-o-y in September, receiving significant support from the Serbian government’s measures limiting trade margins, in place since 1 September.
  • Inflation is expected to remain within the target band of 3±1.5% by the end of this and in the following year.
  • The fact that core inflation has been reduced to below 4% also speaks of generally lower inflationary pressures.
  • We have preserved the relatively stable exchange rate of the dinar against the euro despite heightened volatilities and uncertainties in the global financial and commodity markets.   
  • Thanks to the responsible management, we have also ensured record-high FX reserves, surpassing their pre-pandemic 2019 level by 120%.
  • Gold reserves have been additionally increased, to around 20% of our FX reserves.
  • We have also maintained and strengthened the stability of our financial system, significantly underpinned by the relative stability of the exchange rate of the dinar against the euro.
  • Generally and individually, Serbian banks are stable and hold ample capital and liquidity buffers, considerably above regulatory minimums.
  • On account of our monetary policy easing, interest rates on dinar corporate loans were reduced to below 6.4% (a drop of 1.75 pp), while the ECB’s monetary policy accommodation, along with the preserved low country risk premium, led to a decline in the rates on euro and euro-indexed loans, to below 4.7% (a drop of 1.95 pp).
    • Relative to June 2024, interest rates on dinar corporate loans were lowered by around 22% and on euro and euro-indexed loans by around 30%.
    • Considerably more favourable terms of financing and a relatively stable exchange rate supported the demand and supply of corporate loans, which increased by 9% y-o-y in September, specifically, investment loans by 12.3% аnd working capital and liquidity loans by 10.8%.
  • With unquestionable institutional independence in policymaking, but never in isolation from our people and the policy implemented by President Vučić and the Serbian government, the NBS continued to support the living standards.
    • As one of the outcomes of our supervisory expectations, banks in Serbia have offered more favourable loans to citizens since 15 September – cash, consumer and housing loans, for employees and pensioners with incomes up to RSD 100,000. Many banks offered even more favourable credit terms than the minimum supervisory expectations.
    • As a result, dinar cash loans are available at rates of even below 6%, and loans for first-time home buyers at rates even below 4% in some banks.
    • All monetary, microprudential and macroprudential policy measures were carefully weighed and combined. Together with the more favourable financing conditions and the resulting increase in disposable income and credit activity, this will support economic growth. At the same time, the share of NPLs has been further reduced to a record low of 2.2%.
  • We have also comprehensively regulated the conditions under which creditors are obliged to offer relief measures to borrowers experiencing repayment difficulties:
    • extending the repayment term;
    • changing the type of the agreement;
    • deferring payment of the entire amount of the loan, interest, principal, overdraft or overrunning, credit card debt or of some credit instalments for a period;
    • reducing the interest rate;
    • approval of a payment holiday to the borrower, during which the lender charges neither regular nor default interest on overdue liabilities, while being entitled to charge the agreed regular interest on the outstanding amount of the principal;
    • partial debt repayments;
    • conversion of currency of the obligation, if the pecuniary obligation is not in dinars;
    • partial forgiveness and consolidation of debt;
    • declaring a moratorium on repayment for a period, during which the creditor charges neither regular nor default interest on overdue and unsettled claims, but also does not charge regular interest on the outstanding amount of the principal, and/or debt.

“For more than half a decade, we have been living and working in an environment of growing and increasingly interconnected and amplified global risks and uncertainties. We have equipped Serbia well to manage these risks – FX reserves and government deposits are high, public debt is decreasing, and banks are well-capitalised and liquid. The reserves we have built are a precious resource for the future and they must be managed with care. The interest of all stakeholders in the ecosystem must be the economic progress of Serbia, because that progress is the foundation for everything else – the growth of wages, employment, and a better quality of life for citizens, alongside the inevitable technological changes for which Serbia has the potential”, said Governor Tabaković. 

In December 2024, the IMF Executive Board approved a three-year Policy Coordination Instrument (PCI) for Serbia. At a meeting held on 30 June 2025, the IMF Executive Board concluded the first review of Serbia’s performance under the PCI-supported economic programme.
The PCI is advisory in nature and does not involve the use of financial resources. It is approved for countries that are committed to reform and are implementing strong and credible economic policies.

Governor’s Office