BELGRADE, July 8 (Reuters) - Serbia continues to recover from the energy crisis and remains committed to strong external and fiscal buffers, which would support disinflation, the International Monetary Fund said on Monday in its third review of a stand-by deal.
Belgrade would continue to treat the 2.4 billion euros-worth ($2.60 billion) arrangement as precautionary and will not draw funds, the lender said in a statement.
It said the Balkan country's economy is recovering from the energy crisis that came as a spillover from the 2022 outbreak of war in Ukraine, when Serbia was almost completely dependent on gas imports from Russia.
The IMF said Serbia's economic growth is expected to rise to around 4% in 2024, while annual inflation fell to 4.5% in May, inside central bank's target range of 3%, give or take 1.5 percentage point. The 2024 budget projects a fiscal deficit of 2.2% of GDP.
"Maintaining an appropriately tight monetary policy ... will help guard against remaining inflation risks," IMF Deputy Managing Director Antoinette Sayeh said.
The lender said the Serbian government's ambitious plan that envisions infrastructure and real estate investments ahead of the EXPO 2027 fair is expected to result in higher medium-term fiscal deficit than previously anticipated.
"While higher public investment is needed, the authorities' new plans imply fiscal deficits will exceed the deficit component of the fiscal rule, resulting in its delay," it said. ($1 = 0.9224 euros) (Reporting by Aleksandar Vasovic; Editing by Arun Koyyur)
