Serbia’s consolidated general-government deficit reached approximately RSD 106.5bn in the first five months of 2026, nearly doubling compared with the same period of 2025, when the deficit stood at around RSD 57.6bn.
The wider fiscal gap was concentrated mainly in the first quarter, with monthly deficits recorded in January, February and March. Government finances moved closer to balance later in the period, indicating that expenditure timing, capital payments, transfers and seasonal revenue patterns influenced the result.
Expenditure growth exceeds revenue gains
The government recorded a deficit of RSD 42.3bn in January, followed by RSD 21.7bn in February and RSD 49bn in March. April produced a surplus of RSD 6.7bn, while May was approximately balanced. Although public revenues continued to increase, spending expanded at a faster pace. By the end of May, cumulative government revenue reached approximately RSD 1.81tn, while expenditure approached RSD 1.92tn.
The fiscal deterioration has not translated into an immediate debt sustainability concern. General-government debt stood at approximately RSD 4.56tn at the end of the first quarter of 2026. The latest published year-end debt ratio showed public debt at 43.9% of GDP in 2025, remaining below the Maastricht reference level and moderate compared with many European countries.
External borrowing exposure increases
The structure and direction of borrowing remain important as Serbia finances new obligations in a higher-interest-rate environment. Serbia’s external debt exceeded €52bn by March 2026, including obligations of the government, banks and companies. International borrowing conditions remain more demanding than before 2022 due to higher global interest rates and increased geopolitical uncertainty.
At the same time, Serbia retains significant financial buffers. The National Bank of Serbia’s foreign-exchange reserves reached €29.61bn in June 2026, while the current-account deficit narrowed during the first five months of the year and the dinar remained stable against major currencies. These factors support continued access to financial markets and reduce short-term refinancing pressure.
Investment spending and contingent liabilities remain key issues
The long-term impact of fiscal policy depends increasingly on how borrowed funds are used. Capital expenditure on railways, roads, electricity infrastructure, environmental systems and other productive assets can contribute to future economic growth and public revenues. Projects affected by weak preparation, cost increases or delayed commissioning can increase public liabilities without generating equivalent economic returns.
State-owned enterprises represent another potential source of fiscal exposure. Guarantees, energy-related costs, infrastructure obligations and possible future recapitalisation requirements may not immediately appear in the headline deficit but can later affect the government balance sheet.
Currency structure shapes debt risks
Serbia’s public borrowing remains significantly linked to foreign currencies. Stable exchange-rate conditions limit valuation changes, but the debt structure keeps public finances connected to euro and dollar funding conditions. Greater use of domestic dinar-denominated securities provides additional diversification, although such borrowing typically carries higher interest costs.
Serbia’s fiscal position remains supported by reserves, market access and available borrowing capacity, but the widening deficit increases the importance of investment selection, oversight of state-owned enterprises and transparent management of guarantees. Future financing conditions will increasingly depend on the economic returns generated by new borrowing rather than debt levels alone.
