Serbia entered the second half of 2026 with €30.5 billion in foreign-exchange reserves, general-government debt at 44.1% of projected GDP and contained sovereign risk premia, strengthening its financial position against potential external volatility.
The National Bank of Serbia (NBS) had become a net foreign-currency buyer in the months leading up to the end of July. Between April and July, the central bank purchased €900 million net on the foreign-exchange market, reducing its cumulative net sales since the beginning of the year to approximately €320 million.
The reserve stock at the end of July covered roughly seven months of imports of goods and services, providing a substantial liquidity buffer against external risks.
Foreign-exchange reserves strengthen the external position
The NBS considers the reserve stock an important safeguard against external risks facing Serbia. The economy remains exposed to energy imports, international financial conditions and geopolitical volatility. A renewed increase in oil prices could simultaneously raise the import bill, increase inflationary pressure and affect capital flows. The size of the foreign-exchange buffer gives the central bank greater capacity to manage such pressures and limit disorderly currency movements that could intensify imported inflation.
Sovereign market indicators have also improved. Serbia’s dollar-denominated sovereign risk premium declined by 35 basis points during the second quarter, reaching 123 basis points at the end of June, compared with 218 basis points for the broader emerging-market composite. The premium on Serbia’s euro-denominated debt fell by 16 basis points to 167 basis points at the end of June before increasing slightly to 171 basis points in July. At the end of June, Serbia’s euro risk premium was below Romania’s 254 basis points, while remaining above Hungary’s 110 basis points.
Credit ratings and bond-market access
Credit-rating indicators provide another measure of Serbia’s sovereign position. S&P Global Ratings assigned Serbia a BBB- rating with a stable outlook, placing the country in investment-grade territory under that agency’s assessment. Fitch Ratings maintained a BB+ rating with a positive outlook in July, while Moody’s Investors Service rated Serbia Ba2 with a stable outlook.
The NBS cited exchange-rate stability, responsible fiscal management, high foreign-exchange reserves, stronger GDP per capita compared with similarly rated sovereigns, investment-led growth and resilience to external shocks among the factors highlighted in Fitch’s assessment.
Serbia also retained strong access to international bond markets. On 28 April 2026, the country issued approximately €3 billion equivalent of Eurobonds through three tranches, with investor demand exceeding €8 billion. The five-, ten- and twelve-year securities carried euro-equivalent coupon rates of 4.25%, 4.66% and 4.875%, respectively. The twelve-year tranche was issued as a green bond. The ten-year security was issued in US dollars and subsequently swapped into euros to manage the currency exposure.
Eurobond issuance supports debt management
The April transaction also served a liability-management purpose. Proceeds from the five-year bond were used to finance an early repurchase of part of Serbia’s Eurobond debt maturing in 2027, reducing the concentration of refinancing requirements in the near term. General-government debt stood at 44.1% of projected GDP at the end of June, leaving the ratio below the 60% Maastricht threshold.
The domestic banking sector provides an additional financial buffer. Non-performing loans accounted for only 2.0% of total lending, while borrowing in local currency has increased. These conditions limit the immediate risk that an external shock would translate into a banking-sector solvency problem.
Energy and capital-flow risks remain
The NBS’s downside scenario nevertheless points to significant exposure to prolonged external stress. Under a scenario involving a prolonged energy conflict, Serbia’s 2027 economic growth could be 0.8 percentage points lower, while inflation could be 1.2 percentage points higher. Higher global interest rates would also increase refinancing costs for both sovereign and corporate borrowers. The composition of capital inflows has become another factor in Serbia’s external financing profile. Portfolio investment generated a €3.9 billion net inflow in the second quarter, linked to sovereign and corporate bond issuance.
International capital-market conditions have therefore gained importance in the financing mix, although foreign direct investment remains substantial.
Serbia’s April sovereign transaction demonstrated strong investor demand, while foreign-exchange reserves remained at record levels and sovereign spreads stayed contained. The next major test will coincide with the peak of the Expo investment cycle, when infrastructure-related imports and financing requirements are expected to be higher. The reserve position provides the NBS with foreign-currency liquidity capacity, while the public-debt ratio provides the government with room to absorb temporary fiscal costs. The resulting sovereign position combines €30.5 billion in foreign-exchange reserves, 44.1% public debt relative to projected GDP, euro-denominated sovereign risk premia below 200 basis points and strong demand for international bonds.
