Serbia’s government moved toward a more expansionary fiscal stance in 2026, putting the projected deficit at 3.0%-3.5% of GDP as economic growth recovered. The supplementary measures include nearly 1 billion euros in one-off household transfers, equivalent to about 1% of GDP, as well as higher investment and defence spending.
The government effectively raised its deficit projection in August 2026. The revised outlook follows a 2025 general government deficit of 2.4% of GDP, below the 3% target, while public debt fell to 44.4% of GDP from 46.7% in 2024.
Some infrastructure projects were scaled back as part of the measures. Transfers can support consumption quickly, while well-selected infrastructure investment can raise potential growth, making the composition of spending relevant to the package’s economic effects.
Serbia has more fiscal space than during earlier periods of high public debt. The European Commission described the fiscal loosening as potentially pro-cyclical and said it could complicate inflation management.
The measures could add demand while wage growth and credit were already strong. A central concern is whether higher deficits finance productive assets and reforms or reinforce short-term demand amid rapid wage and credit expansion.
