Serbia’s public finances provide room for an extensive infrastructure investment programme, with public debt remaining below 45% of GDP as capital expenditure increases ahead of the Expo 2027 cycle. The main fiscal challenge is how effectively the government allocates that investment rather than the immediate affordability of additional borrowing.
Central-government debt stood at 43.3% of GDP at the end of August 2026, while general-government debt reached 43.6%. Both figures remain below the Maastricht reference threshold of 60% of GDP and the debt levels recorded by several European Union economies.
The budget recorded a deficit during the first eight months of the year. The general-government shortfall amounted to RSD 109.3 billion, equivalent to approximately EUR 930 million using an exchange-rate conversion of RSD 117.2 per euro.
Revenue Growth Trails the Increase in Public Spending
General-government revenues rose by 12% year on year in January–August, supported by higher social contributions, value-added tax, non-tax income and corporate-profit tax receipts. Expenditure increased at a faster pace, growing by 13.8% over the same period. The rise reflected higher spending on wages, pensions and purchases of goods.
Capital expenditure accounted for a substantial part of the budget’s investment activity. Public capital spending reached RSD 440.2 billion, or approximately EUR 3.76 billion, in the first eight months of 2026. That was almost RSD 98 billion more than in the corresponding period a year earlier and represented 61.3% of the amount envisaged in the Fiscal Strategy. The increase indicates that Serbia is directing part of its available fiscal capacity towards infrastructure and other assets, alongside expenditure on public-sector wages and pensions.
Investment Returns and Project Selection
With public debt below 45% of GDP, the economic impact of additional infrastructure spending depends increasingly on the returns generated by individual projects. Road construction that reduces logistics costs, railway connections that facilitate exports and utility infrastructure that enables private-sector investment can contribute to higher potential economic growth.
Projects that deliver construction activity without creating comparable long-term economic benefits can produce a similar immediate spending impulse while adding less lasting value to the economy. The scale of the capital programme therefore places greater importance on project selection and the capacity of public investment to support productivity, exports and private-sector activity.
Eurobond Issuance Shapes the Financing Structure
Changes in Serbia’s public debt during 2026 were partly associated with a EUR 3 billion Eurobond issuance, carried out in three tranches. International borrowing is taking place while the country’s debt ratio remains relatively low, but the cost and currency composition of financing remain relevant to public-debt management.
Serbia has also been working to deepen its domestic-currency bond market, with the aim of reducing exposure to currency-related vulnerabilities over time. As the Expo investment programme progresses, the country’s fiscal position will therefore be assessed not only through its borrowing requirements but also through the structure and long-term cost of financing.
