The cost of interest that Serbia pays on its borrowings has reached 5% of GDP, which could soon exceed two billion euros annually, it was stated at the presentation of the monograph Financial Disturbances in the Era of Post-Pandemic Geopolitical Risks: Serbia and the World by Professor Dr Đorđe Đukić.
In addition to the author, a full professor at the Faculty of Economics in Belgrade, the book’s reviewer, Professor Dr Božo Drašković, also spoke at the event.
The fixed exchange rate hampers economic development
According to Nova ekonomija, the central part of the discussion was devoted to the situation Serbia currently finds itself in, with both speakers highly critical of the present model.
The strongest criticism was directed at maintaining a fixed exchange rate of the dinar against the euro for more than a decade. Đukić argues that such a policy encourages imports, undermines the domestic real sector (such as agriculture) and discourages exports.
“It makes the domestic economy far more dependent on the global market than it would otherwise need to be,” Drašković said.
Đukić added that the fixed exchange rate contributes to various abuses and the creation of privileged groups that profit at the expense of ordinary people. In his view, the fixed rate is sustained through borrowing, inflows of foreign direct investment and remittances, which he considers unsustainable in the long term.
Deteriorating borrowing conditions
The experts also warned of a “drastic deterioration” in borrowing conditions for countries such as Serbia. While GDP growth is low (around two per cent), interest rates on debt are reaching five per cent, leading to a situation in which annual interest outflows will soon exceed two billion euros.
“If gross domestic product is growing at 3.5 per cent and you are paying five per cent in interest, you do not need to be particularly intelligent to realise that interest outflows will very quickly exceed two billion euros. Who will pay for that? We, the taxpayers, our generation, our grandchildren,” Đukić said.
The sale of Komercijalna Banka was also criticised, as Serbia thereby lost the ability to direct development policy through a domestic institution. It was highlighted that more than 85 per cent of the banking sector is in foreign hands, which use the domestic environment for their own interests. As Drašković stressed, foreigners are not to blame for this; they are merely taking advantage of an environment that we ourselves have created for them, to the detriment of our own economic interests.
(Biznis i Finansije, 03.03.2026)