Serbia plans to widen its 2026 budget deficit by about €503 million, with higher allocations for roads, pensions, healthcare and social support exceeding the improvement in projected revenue. Under the proposed supplementary budget, the deficit would reach approximately €3.38 billion, or 3.5% of projected GDP, compared with the original target of about €2.88 billion, according to an analysis in the September MAT bulletin. Budget revenue is projected to rise 4.7% to around €21.56 billion, while planned expenditure increases 6.2% to approximately €24.94 billion.
Non-tax revenue provides the largest increase
The biggest upward revision on the revenue side comes from non-tax income, which is expected to increase by around €679 million. Projected payments from profits and dividends of state-owned companies are set to rise by approximately €520 million, reaching around €623 million. Tax revenue is forecast to increase by 1.4%. Corporate income tax receipts are expected to bring in an additional €205 million, while value-added tax revenue is projected to increase by €239 million. Planned excise revenue, however, is being reduced by approximately €196 million, largely because expected excise collections from petroleum products are being lowered by around €239 million. Customs revenue is also cut by about €38 million.
Pension, healthcare and road spending increases
On the expenditure side, transfers to social-insurance institutions are projected to rise by approximately €441 million. The increase reflects one-off payments to pensioners, higher healthcare spending on medicines and equipment, and additional transfers to the pension fund.
Subsidies are set to increase by around €250 million, with road-transport subsidies more than doubling. Their planned increase of approximately €189 million is largely linked to higher allocations for Putevi Srbije and Koridori Srbije. Capital expenditure is also being raised by about €172 million, while planned interest and related borrowing costs are reduced by roughly €126 million.
Higher dividend transfers support the revised budget
The supplementary budget represents a more expansionary fiscal position while household consumption is already increasing strongly. The additional spending provides greater allocations for infrastructure and domestic demand, while the higher deficit reduces available fiscal space if economic growth weakens or budget revenues fall short of expectations. A significant portion of the additional financing is linked to higher dividend transfers from public companies. The increased payments provide additional budget revenue, while reducing the funds those companies retain for investment.
