Serbia is targeting a 2027 budget deficit of no more than 2.75% of GDP as the government continues a large public investment programme involving infrastructure, energy and Expo 2027 projects. Finance Minister Siniša Mali said during the IMF’s fourth review of Serbia’s Policy Coordination Instrument (PCI) that the 2027 budget would be completed by the end of the year and that the government expected the deficit to remain within the 2.75% limit.
The government target is below the 3% of GDP deficit projected for 2027 in the IMF’s June assessment. The Fund’s latest published projections put Serbian GDP growth at 2.8% in 2026 and 4.0% in 2027, with infrastructure and Expo-related activity contributing to the expected acceleration.
IMF Review Covers Fiscal and Structural Policies
The IMF mission, led by Annette Kyobe, is conducting the fourth review under Serbia’s three-year, non-financing PCI programme, which runs from December 2024 to December 2027. The Finance Ministry said the review is scheduled to be considered by the IMF Executive Board. Unlike an IMF lending arrangement, the PCI does not provide Serbia with Fund financing. The programme instead provides policy monitoring and a framework for assessing fiscal, economic and structural policies. Under the previous review, Serbia and the IMF maintained a 3% of GDP fiscal deficit ceiling for 2026–27, while the Fund also stressed the need to preserve fiscal discipline alongside large public investment requirements.
Infrastructure Spending Remains Central to Growth
Serbia’s investment programme includes railways, roads, energy infrastructure and Expo 2027-related projects. The IMF’s June projections showed 2027 growth rising to 4.0%, from 2.8% in 2026, while the Fund had previously projected 4.6% growth for 2027. The lower forecast places greater emphasis on the contribution of investment to overall economic activity.
Maintaining a deficit below 2.75% while continuing major capital spending would require expenditure management alongside the protection of priority investment projects. The IMF has identified public investment management and fiscal-risk controls among the areas requiring continued reform. The Fund has also identified risks connected with state-owned enterprises and energy-sector support, while its fiscal assessments have stressed the need to keep energy-related measures temporary and targeted.
Energy Costs Add Fiscal Pressure
Energy remains an important variable for Serbia’s fiscal and economic outlook. The IMF’s June assessment said measures introduced in response to higher global energy prices should remain temporary. The Fund also called for structural reforms aimed at improving the security and sustainability of Serbia’s energy sector. In the IMF downside scenario, higher global energy and commodity prices would reduce Serbian GDP growth to 2.0% in both 2026 and 2027, compared with baseline projections of 2.8% and 4.0%. Inflation would also rise substantially under that scenario. The fiscal implications include potential pressure for additional government support to households, companies and energy-related entities, while maintaining the deficit target would require corresponding expenditure controls.
Public Debt Remains Below 45% of GDP
The IMF projected Serbia’s gross public debt at 44.7% of GDP in 2026 and 44.6% in 2027. The Fund has linked continued fiscal discipline to keeping public debt on a declining path while accommodating Serbia’s large public investment needs. It has also highlighted the importance of project prioritisation and stronger public investment management. For 2026, the IMF said Serbia’s budget maintained the 3% of GDP deficit ceiling, while fiscal-risk measures included potential reprioritisation of investment projects and reductions in non-essential spending if necessary.
Medium-Term Growth Depends on Investment and Productivity
The IMF has lowered its estimate of Serbia’s longer-term potential growth to around 3.5%, citing slower capital accumulation and limited productivity gains. The investment cycle surrounding Expo 2027 and major infrastructure projects is therefore occurring alongside structural reforms intended to support longer-term economic activity.
The fourth PCI review comes as Serbia prepares its 2027 budget and continues investment spending while targeting a lower fiscal deficit than the IMF’s current 3% baseline projection. The 2.75% of GDP target will be incorporated into the government’s budget planning as it allocates fiscal resources among infrastructure investment, energy measures, wages, pensions and other public expenditure commitments.
