Republic of Serbia: 2025 Article IV Consultation, First Review Under the Policy Coordination Instrument, and Request for Modification of Targets-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia

This paper discusses Serbia’s 2025 Article IV Consultation, First Review under the Policy Coordination Instrument, and Request for Modification of Targets. 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. Despite increased public investment, the fiscal deficit remains under control due to strong revenue performance and prudent management of current spending. 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. 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.