Serbia sharply increased public investment during the first seven months of 2026, while general-government debt remained around 44% of GDP amid continued infrastructure and Expo-related spending. The general government recorded a fiscal deficit of RSD 105 billion, equivalent to roughly €900 million, in January-July.
Government revenue increased 11% year on year, supported by higher social-security contributions, VAT and non-tax income, as well as increased corporate profit-tax receipts.
Capital spending drives expenditure growth
Government expenditure rose faster than revenue, increasing 15.1% during the period. The increase reflected higher wages and pensions, purchases of goods and a significant expansion in capital expenditure. Capital spending reached RSD 394.4 billion, or approximately €3.4 billion, in the first seven months. That was almost RSD 100 billion above the comparable amount a year earlier and represented about 55% of the capital expenditure planned under the fiscal strategy. Infrastructure investment and spending connected with Expo remained central components of the government’s expenditure programme.
Debt ratio remains broadly stable
Despite the acceleration in public spending, general-government debt stood at 44.2% of GDP at the end of July, while central-government debt was 43.9%. The stable debt-to-GDP ratio contrasts with the sharp increase in capital expenditure, leaving Serbia with a relatively low government debt burden while implementing a major public investment programme. The scale of spending nevertheless places greater importance on the government’s financing strategy and the structure of new borrowing.
Serbia diversifies government financing
Serbia raised approximately €3 billion on international markets in April through three eurobond tranches with maturities of five, 10 and 12 years. The longer maturities reduce the concentration of refinancing requirements in the near term, while the government is also developing the domestic dinar bond market. The combination gives Serbia access to both domestic local-currency financing and international euro-denominated borrowing.
Investment spending and future fiscal capacity
The fiscal impact of the investment programme will depend partly on how effectively capital spending translates into higher productivity and future tax revenues. Infrastructure projects can support economic activity by reducing transport costs and attracting private investment, while Expo-related expenditure includes a more temporary component. The distinction between these two types of spending is expected to become more visible after 2027, as the Expo-related investment and construction cycle moves beyond its peak.
Serbia is currently financing a large public-investment programme without a corresponding increase in its debt-to-GDP ratio, while the government continues to combine international eurobond issuance with development of domestic dinar financing.
