Press Release No. 20/74

IMF Staff Concludes Visit to Serbia

February 28, 2020

• IMF mission assessed progress in implementing the Policy Coordination Instrument (PCI).
• Serbia’s economic program continues to deliver strong macroeconomic results.
• IMF mission advocates enhanced fiscal rules, better governance of state-owned enterprises, and privatization of Komercijalna Banka and HIP-Petrohemija.

An International Monetary Fund (IMF) mission, led by Jan Kees Martijn, visited Belgrade during February 24–28, 2020 to evaluate the 2019 outturn, assess progress in meeting commitments under the PCI, and discuss policy priorities for 2020. A full mission for the fourth review under the PCI is planned for the second half of May. At the conclusion of the visit, Mr. Martijn issued the following statement:

“Serbia’s macroeconomic performance remained robust in 2019, with growth estimated at 4.2 percent, supported by strong foreign direct investment and booming construction activity. Unemployment declined to historically-low levels, with steady growth of wages. Inflation, at 2 percent in January, remains in the lower half of the target band. The resilience of the financial sector continues to improve, with non-performing loans falling to 4.1 percent in December 2019. Fiscal performance has remained strong. The general government posted a fiscal deficit of 0.2 percent of GDP in 2019, consistent with PCI targets, while public debt declined to about 52 percent of GDP.

“The macroeconomic outlook for 2020 is positive, with growth projected at 4 percent and inflation expected to stay within the lower half of the target band. However, risks are elevated, especially on the external front, and an important structural reform agenda remains. In this context, the mission stressed the need to fully implement the reforms committed under the PCI to cement macroeconomic gains and boost Serbia’s growth potential.

“The mission welcomed the authorities’ efforts to complete the privatization of Komercijalna Banka and stressed the importance of privatizing HIP Petrohemija. It also assessed preparations to ensure the implementation of the new public wage system and move to a new, more structured public employment framework in 2021. The mission supported recent efforts to properly monitor fiscal risks and discussed options to enhance fiscal rules. It also emphasized the importance of strengthening the governance of state-owned enterprises to improve efficiency and the quality of public services.

“The mission team is grateful for the authorities’ hospitality and close cooperation.”