Serbia’s government has become the country’s largest single organiser of investment and procurement, with public spending supporting infrastructure, utilities, healthcare, technology and industrial development.
General-government investment exceeded 7.3 per cent of GDP in 2024, while the 2026 budget allocated RSD740bn for capital investment, equal to 6.7 per cent of projected GDP. Public procurement represented 10.87 per cent of GDP in 2024, giving the state a scale of demand that no individual Serbian company can match.
The public investment system covers ministries, municipalities, transport companies, hospitals, the national health fund and state-controlled groups in electricity, gas, telecommunications and banking. Roads, bridges, railways, wastewater systems, hospitals, schools, defence, IT infrastructure, medicines, vehicles and energy equipment all generate public-sector demand.
Infrastructure and public services drive procurement
The state can act simultaneously as buyer, project sponsor and guarantor. Even where construction is undertaken by a private contractor, public funding or a government-backed commitment generally provides the foundation for project revenue. The investment programme reflects Serbia’s infrastructure requirements, the cost of meeting EU environmental and transport standards, preparations for EXPO 2027 and the role of state-owned enterprises in natural-monopoly sectors.
Limited municipal and project-finance markets also leave the central government as the principal borrower capable of securing longer-term financing. Public investment therefore combines infrastructure development with broader economic and employment objectives.
The procurement system itself is distributed across several major purchasing centres. Roads of Serbia and railway entities commission transport infrastructure, while EPS and electricity distributors purchase generation, grid and metering equipment. Srbijagas develops and procures gas infrastructure, while health authorities purchase medicines, medical equipment and hospital construction. Cities procure transport, utilities and public services. Telekom Srbija and other state-controlled companies operate commercially while also participating in infrastructure projects with public-policy objectives.
State contracts create opportunities but raise procedural risks
The scale of public purchasing creates different requirements for suppliers. Construction companies need bonding capacity and project references, technology providers require security, localisation and maintenance capabilities, while pharmaceutical companies depend on reimbursement mechanisms and tender access. Foreign investors may also require intergovernmental arrangements or export-credit structures. Because the state can simultaneously establish the rules and become the customer, public procurement can provide substantial demand while exposing companies to procedural and political considerations.
Competition remains a significant issue. The European Commission recorded an average of 2.5 bids per procurement in 2024, while 50.75 per cent of procedures received a single bid. Contracts outside the standard procurement framework were estimated at €5.7bn, including €1.2bn concluded under intergovernmental agreements. Special laws and strategic-partner procedures can accelerate selected projects, but they also reduce comparability between bids and the scope for public scrutiny.
Domestic debt and Eurobonds finance the investment cycle
Public investment is financed through a combination of government revenue and borrowing rather than by assigning individual projects to particular sources of funding. Taxes, VAT, social contributions and other revenues finance public activity, while debt provides funding for deficits, refinancing and the timing differences between revenue collection and investment expenditure. At the end of June 2026, central-government debt stood at €41.29bn, equivalent to 43.8 per cent of GDP, while general-government debt was 44.1 per cent of GDP.
Serbia’s outstanding government securities included €8.67bn of domestic securities and €12.42bn of Eurobonds. External obligations included €2.95bn owed to international commercial banks, €2.83bn to China Exim Bank, €2.24bn to the World Bank’s IBRD, €2.11bn to the IMF and €1.49bn to the EIB.
Additional foreign-government and institutional exposures included financing from the Council of Europe Development Bank, AFD, KfW and EBRD. Serbian banks, insurers and pension funds provide a natural investor base for dinar-denominated government securities, while international asset managers, banks, official lenders and bilateral partners supply foreign-currency financing.
May bond issue added €2.1bn and $1.25bn of financing
Serbia raised substantial funds in international markets in May 2026 through three bond tranches: a €1bn five-year bond carrying a 4.25 per cent coupon, a $1.25bn 10-year bond at 5.50 per cent, and a €900mn 12-year bond at 4.875 per cent. Development institutions can provide longer-term or lower-cost financing, generally accompanied by procurement, environmental and governance requirements. An EIB package exceeding €192mn for health and wastewater projects illustrates the structure, combining a €157mn loan with €35.5mn in EU grants.
Foreign-currency debt remains a key fiscal exposure
The composition of government borrowing creates additional risks alongside the overall debt ratio. At the end of June, 79.1 per cent of central-government debt was denominated in foreign currency, while 32.3 per cent carried variable interest rates. Euro-linked revenues and foreign-exchange reserves provide some protection, but a weaker dinar, higher benchmark interest rates or project cost overruns could increase debt-service costs. Borrowing by public enterprises can also create contingent liabilities even when it does not initially appear directly in the government budget.
The IMF’s June 2026 review retained a 3 per cent of GDP deficit ceiling and projected public debt to remain around the mid-40s percentage of GDP. It also identified fiscal risks associated with Roads of Serbia and Belgrade, while calling for stronger appraisal, prioritisation and monitoring of public investment. The review specifically included special-interest and government-to-government projects within the areas requiring stronger oversight, placing greater emphasis on project selection and implementation alongside Serbia’s continued high level of capital expenditure.
For companies, the public investment programme provides a substantial pipeline of contracts and can support industrial activity around new infrastructure. At the same time, extensive state demand can compete with private borrowers for financing, favour established companies with procurement experience and leave some sectors dependent on the annual public-investment cycle.
