Serbia recorded a €833 million central-government budget deficit in the first seven months of 2026, about €321 million below the planned shortfall, according to Finance Ministry data. The government had projected a deficit of approximately €1.15 billion for the January-July period, making the actual result around 28% smaller than expected. Fiscal spending accelerated sharply in July. The monthly deficit reached about €394 million, with revenues of roughly €1.90 billion compared with expenditure of around €2.30 billion.
Capital expenditure drives July spending
Capital expenditure accounted for a significant share of July outlays, reaching approximately €774 million, or about one-third of total central-budget expenditure. Other major spending categories included €468 million for public-sector employee costs, around €285 million in transfers to compulsory social-insurance organisations, and approximately €167 million for social protection.
The government also spent about €162 million on interest, €160 million on goods and services, and approximately €153 million on subsidies. The July figures came as Serbia increased its planned 2026 general-government capital expenditure to approximately €6.64 billion, equivalent to around 7% of GDP and €362 million more than originally budgeted. The programme includes Expo 2027, the Belgrade Metro, motorways, railways and other major infrastructure projects.
Tax revenues remain substantial
July’s expenditure increase has not been accompanied by a comparable deterioration in revenue collection. Tax revenues reached approximately €1.65 billion during the month, including around €842 million in VAT, €382 million in excise duties and €242 million in corporate profit tax. Non-tax revenues contributed about €239 million, while grants amounted to roughly €15 million. VAT receipts remained consistent with resilient domestic consumption and nominal economic growth, while corporate profit tax collections reflected continued profitability across the business sector.
General-government balance remains near neutral before interest
At the broader general-government level, Serbia recorded a deficit of approximately €894 million during the first seven months. The primary balance was approximately neutral, meaning revenues broadly covered government expenditure before interest payments. Interest costs are consequently an increasingly important component of the overall fiscal deficit.
Public debt stood at €41.82 billion, equivalent to 43.9% of GDP, with the nominal debt stock approximately €2.5 billion higher than at the end of 2025. Serbia already spends close to 2% of GDP on interest, despite maintaining a debt ratio well below the EU average. In July alone, interest expenditure of about €162 million amounted to more than one-fifth of capital expenditure.
Infrastructure programme raises execution demands
July’s larger deficit comes as major infrastructure projects move through construction and payment stages. Infrastructure spending is not distributed evenly across months, as expenditure can depend on construction certificates, imported equipment, mobilisation schedules and contractual milestones. The €394 million July deficit nevertheless represented almost half of the central-government shortfall accumulated during the first seven months. If similar monthly deficits were recorded through the remainder of 2026, part of the €321 million fiscal cushion against the original seven-month budget target would be absorbed. The government’s medium-term framework envisages deficits of around 3% of GDP through the main investment cycle before they gradually decline.
Investment and recurring expenditure remain key fiscal factors
Serbia’s infrastructure programme covers transport, energy, public transit and environmental infrastructure, while Expo 2027 and motorway, railway and metro construction are progressing simultaneously. Capital spending can create productive assets, whereas interest payments service previously accumulated borrowing. The distinction is therefore increasingly relevant as Serbia’s debt stock and investment programme expand.
The government is also approaching a more intensive delivery phase for Expo 2027, while other major infrastructure projects continue, potentially keeping capital expenditure elevated into 2027. The fiscal framework therefore depends on continued economic growth, control of recurring expenditure and the execution of major investment projects. The €321 million improvement against the seven-month deficit target leaves Serbia with fiscal room, while July’s spending pattern shows that the government’s investment programme is beginning to place greater demands on that capacity. With annual capital expenditure planned at nearly €6.6 billion, public debt above €41 billion and major infrastructure projects progressing simultaneously, capital-expenditure execution, the primary balance and interest costs remain central indicators for Serbia’s fiscal position.
