Serbia’s public debt has reached €41.93 billion, with borrowing from commercial banks rising sharply to €5.5 billion from less than €200 million six years earlier.
Public debt stood at 43.3% of GDP, while almost 80% of the debt is denominated in foreign currencies, according to figures reported by Biznis i Finansije. The changing composition of government borrowing has increased the role of commercial banks alongside international capital-market investors and holders of domestic government securities.
Eurobond holders remain largest creditor group
Eurobond investors represent the largest creditor category, holding €12.9 billion of Serbia’s public debt. They are followed by holders of long-term dinar-denominated securities, whose holdings amount to €6.9 billion. Direct government liabilities total €40.24 billion, consisting of €29.25 billion in external debt and €10.99 billion in domestic debt. State guarantees account for an additional €1.68 billion. The overall debt stock is approximately 2.4 times the €17.7 billion recorded at the end of 2012. At the same time, debt as a share of GDP has declined from 50.8% to 43.3% as the economy expanded.
Bank loans become larger part of government financing
Serbia did not issue government securities on the domestic market during August, while continuing to draw on bank loans. Commercial-bank lending to the government has therefore become a significantly larger component of public financing, increasing from less than €200 million six years earlier to €5.5 billion.
The growing role of bank financing places greater importance on the terms attached to those loans and their repayment schedules, while the lower debt-to-GDP ratio provides additional fiscal room compared with the earlier level. The expansion of bank borrowing also makes financing costs associated with commercial-bank loans increasingly relevant to Serbia’s budget.
