Radio Free Europe searched for an answer to the question: where did Serbian President Aleksandar Vučić find the money he promised to distribute to citizens by the end of the year, whether through increases in pensions and salaries or cash giveaways?
Our guests were Danica Popović, a professor at the Faculty of Economics in Belgrade, and Milan Ćulibrk, editor of the Economics desk at the Belgrade weekly magazine Radar.
They discussed whether the government will have to execute a budget rebalance to fulfil Vučić’s promise of standard lump-sum financial aid – costing €600 million – for pensioners, the socially vulnerable, and military veterans; whether the state will have to take on additional debt to secure that money; and why financial assistance is not being restricted to low-income pensioners, but given to high-income pensioners as well.
The discussion also touched on Vučić’s announcement of a cash gift to all adult citizens of Serbia from a fund they actually own and which should have legally been paid out to them long ago; whether a segment of the public will answer the call from Srđan Milivojević, leader of the opposition Democratic Party, to accept the money and donate it to university students; and whether bribing the electorate can help Vučić win the upcoming elections.
Omer Karabeg: President Vučić has announced a one-off relief package for pensioners, welfare recipients, child allowance beneficiaries, and war veterans. He has promised cheap medicines and spa vouchers. Payments are set to begin as early as September. The package is estimated to cost more than €600 million. Is there money in the budget for this?
Danica Popović: Of course there is no money in the budget for this. The budget was drawn up at the beginning of the year when Vučić didn’t have these intentions and desires. But that isn’t a problem for him at all. The government will simply borrow that amount at a very high interest rate, and the loan will be repaid by the very people who are receiving these gifts now. But this isn’t the first time; Vučić has been doing this for years.
Milan Ćulibrk: Every year, Serbia’s budget runs a deficit of around two billion euros. This year, the deficit will be even larger because €600 million that wasn’t planned for in the budget will be paid out. Certain projects scheduled for implementation might even be sacrificed to secure funds to grease the voting machine ahead of the elections.
The problem is that for years this budget deficit has been covered through new borrowing – a trend particularly pronounced since 2020, when the state first started handing out so-called “helicopter money” following the pandemic. Because of this, our national debt is growing year after year, and interest payments are soaring. This year alone, we will pay over two billion euros just on interest.
Omer Karabeg: Vučić won’t just be treating low-income pensioners, who will receive 35,000 dinars; he is also giving 20,000 dinars to those with high pensions. Why is he giving money to them as well?
Danica Popović: Because those people would be dissatisfied if they received nothing. Their line of thinking goes: “I’m expected to vote for you, yet you won’t even give me enough for a bar of chocolate.” Vučić has calculated everything. He has a good PR team. Public opinion is polled at least once a week, giving him direct insight into what people think. It’s obvious that well-to-do people feel they deserve something from the president as well, not just the poor.
Milan Ćulibrk: Vučić gives money to the wealthy for the exact same reason he handed out €100 to the country’s richest citizens back in 2020 – people whose annual incomes reach tens of millions of euros. He gave them the exact same sum as the poorest. I have nothing against helping people who actually need assistance. But that is not done by having the president decide to hand out money to everyone when that money isn’t actually his – it’s ours.
Assistance should be directed to those in need because those people will primarily buy basic groceries required for survival, which are mostly domestic products. As it stands, a good portion of this money will go towards buying foreign goods, driving up our imports and our foreign trade deficit. Ultimately, we will be boosting the economies of Germany, France, Switzerland, or Italy, rather than the Serbian economy.
Omer Karabeg: Vučić also announced a significant pension increase in December this year and a salary hike from the New Year. Can the budget handle this, or will the government have to revise the budget to cover it all?
Danica Popović: If there is one thing this government knows how to do, it’s revising budget plans. Ever since they took their ministerial seats, they have been amending the budget according to the president’s mood. That said, Vučić never lies when it comes to pension increases. He always keeps his word.
It might happen that the increase doesn’t take place in December as announced, but rather in January, but his announcements are always reliable, and the money always arrives so that pensioners remain grateful to their great benefactor.
Omer Karabeg: This year, the money will definitely reach pensioners before the elections.
Danica Popović: Naturally, because he sets the election date, so he will schedule them for when he estimates he can secure the highest number of votes. He knows how to do that, but right now that isn’t enough because a good portion of the electorate has shifted its support to the students. That is his biggest problem.
Omer Karabeg: Is there any indication as to how large the pension increase might be? Vučić hasn’t mentioned percentages so far.
Milan Ćulibrk: The size of the pension increase will be clear after 25 August, when figures for June’s average salary are published. By law, pensions are adjusted every year on 1 November in line with wage growth between the previous June and the following June. That is when the exact percentage increase will be known.
The president is promising something that is already a legal obligation, and he has been doing this for years. He promises pensioners they will get what is legally theirs anyway. I wouldn’t rule out the possibility of elections in December, with increased pensions paid out beforehand so Vučić can say: “I promised you higher pensions, and I delivered.”
Omer Karabeg: Could Vučić promise a slightly higher increase than the one required by law?
Milan Ćulibrk: The government has committed not to deviate from the criteria agreed with the International Monetary Fund, which includes the obligation that pensions will only be increased strictly in accordance with the law.
Omer Karabeg: And would the International Monetary Fund react if Vučić gave pensioners more than the legal obligation?
Milan Ćulibrk: Unfortunately, the International Monetary Fund has failed on several occasions to react to government moves that breached agreements, but I don’t think Vučić will dare to take the risk this time. Besides, I believe the regime will manage – through its propaganda machine – to convince pensioners that an increase of around 10 percent, which seems to be the statutory amount, is a massive rise.
Omer Karabeg: Professor Popović, you mentioned that money for all these increases and giveaways is secured through borrowing. The state borrowed three billion euros in the first six months, and another 500 million in recent days through bond issuance. Will all this be enough, or will the state need to borrow even more to fulfil all of Vučić’s promises?
Danica Popović: Vučić doesn’t just borrow on the international financial market. He loves borrowing money from the Chinese, Russians, and Arabs as well. These are loans the public knows very little about – we have no idea what the interest rates are. And sometimes, when we are in a tight spot, they extend our repayment deadlines.
What we are required to do for them financially or politically in return remains a major question. I believe those loans are the primary danger, rather than the money we borrow on the open international market, where transactions can be tracked.
Milan Ćulibrk: Naturally, there will be fresh borrowing. Every year, the budget deficit has to be patched up. The country’s balance of payments deficit also needs fixing, as we spend far more on imports than we earn from exports. Until recently, the regime managed to cover a good deal of that through Foreign Direct Investment, which stood at around four billion euros annually until a year and a half ago. That is no longer the case.
This year, for the first time, foreign investment outflows exceeded inflows. Foreign investors who put money into Serbia are now pulling capital out of the country, making it increasingly difficult to plug the budget deficit.
Furthermore, a two-billion-dollar debt to the United Arab Emirates was due this year, but payment was deferred until next year. Postponing debt repayments is simply taking on new debt, so by the end of the year, the public debt will grow by several billion euros more.
Danica Popović: When we discuss all this money about to be handed out to citizens, we forget that it won’t be enough to offset inflation. There is no real-term increase in salaries, pensions, or wages in this country. Despite all the giveaways, the poorest will feel no improvement whatsoever because food prices have outpaced inflation.
Omer Karabeg: Particularly interesting is President Vučić’s announcement of a cash giveaway for all adult citizens. This payout will come from the Share Fund, whose owners are the citizens who acquired the right to free shares during the privatization process. Does this mean Vučić is giving citizens their own money as a gift?
Milan Ćulibrk: Precisely that. Around 4.8 million Serbian citizens who were adults on 31 December 2007 hold a 98.6 percent stake in the Share Fund. That is established by law. The president is promising them they will receive what should have been paid out to them every year for the past 16 and a half years – a period during which not a single payout occurred following the initial one in January 2010, when the Share Fund was founded.
The state-managed Share Fund holds around 27.5 billion dinars in deposits across various banks. We don’t know which banks they are, nor at what interest rates, even though as shareholders we ought to be informed about what is happening to our property.
Is that money sitting in private, privileged banks owned by people very close to President Vučić and top figures in the Serbian Progressive Party, or is it in Poštanska Štedionica as a state bank? We simply don’t know, though we certainly should.
President Vučić promised financial aid to all adult citizens, but he won’t be able to deliver on that because anyone under 36 was not an adult in 2007 and is not a shareholder in the Share Fund. Paying money to them as well would constitute a direct breach of the law. It’s possible the regime will try to cobble something together – to push through additional amendments to include people who weren’t adults in 2007 among the shareholders.
Danica Popović: It won’t bring people much joy. It’s a modest gift that gets forgotten quickly. At best, it might serve as a minor selling point for him as a promise for the future. But I hope we will bring down that future of his at the upcoming elections, so there won’t be any more of this.
Omer Karabeg: Srđan Milivojević, president of the Democratic Party, advised citizens to donate that money to university students. Will anyone follow his advice?
Danica Popović: I think they will, because a large number of people have students in their families. I, for one, plan to do just that.
Milan Ćulibrk: I also believe many will donate that money to students. I would remind you that a similar debate took place in 2020 during the pandemic, when the authorities handed out €100 to every adult citizen. At the time, I publicly advocated that people take that money and transfer it to someone in need. I donated mine to a soup kitchen and advised others to do the same. Right now, the best thing to do is direct that money towards those who can bring about change, so Serbia can finally become a normal state.
Omer Karabeg: Will Vučić manage to win over a segment of the public through all this rampant bribing, helping him win the elections?
Danica Popović: I don’t think so. I believe everything is crystal clear to the citizens of Serbia, and opinion polls show his support is dropping daily. If that weren’t the case, elections would have been called already. I hope he has already lost the election, and the results will prove whether I’m right.
Milan Ćulibrk: It will help him secure some votes, but I hope all this money won’t be enough this time to buy an absolute majority that would allow him to continue ruling as he has for the past 14 years. However, cash gifts aren’t the only tool this regime uses to scrape together votes.
There are also threats, pressures, and repression; there are public sector employees who are forced to photograph their ballot papers to prove that not only they, but their family members as well, voted for the ruling party – because doing so is a prerequisite for keeping their jobs.
Then there are many who ought to be in prison for criminal offences, but are out on the streets serving as guardians of this regime. So, their toolkit of measures is exceptionally broad.
(Radio Free Europe, 27.07.2026)