Republic of Serbia: Second Review Under the Stand-By Arrangement, and Request for Modification of Performance Criteria-Press Release; and Staff Report for Republic of Serbia

This paper presents Republic of Serbia’s Second Review under the Stand-By Arrangement, and Request for Modification of Performance Criteria. Despite a challenging global environment, growth is recovering, and the labor market is resilient. The current account deficit has narrowed significantly, foreign direct investment remains robust, and foreign exchange reserves are at record highs. Risks have fallen since the start of the program. Macroeconomic outturns under the program remain strong, with recovering growth, ongoing disinflation, a narrowing current account deficit, and record high foreign exchange reserves. The 2024 budget is appropriately tight while providing room for needed public investment. The financial situation of the energy sector state-owned enterprises (SOE) has been stabilized, and structural reforms in the energy sector companies, SOE governance and broader fiscal management are progressing well. Program performance remains strong, reflecting the authorities’ program ownership. All quantitative performance criteria and indicative targets were met, as were the end-October 2023 structural benchmarks (SB) on energy tariff increases, and a prior action on approving the 2024 budget. The SB on medium-term budgeting was completed with a short delay.