A citizen aid package worth nearly one billion euros is not “free money”, as all spending must be paid for at some point, estimates economist and former member of the Anti-Corruption Council, Dr Danilo Šuković, for Insajder.
While the government presents the budget revision and new handouts as proof of public finance stability and support for citizens, Šuković believes that part of this money will be “wiped out” in the long term through inflation, while due to the redistribution of funds, the bill will, in his view, ultimately fall primarily on the poorest.
On 31 August, the Serbian Parliament adopted the budget revision for 2026, alongside a law providing a package of one-off financial support for citizens. The authorities present this move as the result of higher-than-expected revenues and proof of public finance stability. The total value of the announced aid comes to 980.6 million euros.
Depending on the size of their pension, pensioners will be paid 35,000, 27,500, or 20,000 dinars; recipients of child allowance, financial social assistance, and veterans’ allowance will receive 25,000 dinars each; while veterans who do not receive a veterans’ allowance will get 10,000 dinars. Adult citizens who have not acquired the status of rights holders within the scheme for free shares are allocated 6,000 dinars each.
Through the budget revision, total revenues and receipts were increased by 112.4 billion dinars to 2,527.2 billion, while expenditure and outlays are planned at 2,923.15 billion dinars. Capital investments at the general government level are projected at 779.9 billion dinars, or around seven per cent of GDP. Public debt is projected to reach 43.8 per cent of GDP at the central government level by the end of the year.
The Fiscal Council, however, warns of an increase in the fiscal deficit and assesses that additional government spending could heighten inflationary pressures. The government, on the other hand, insists that public finances are stable and that money from increased revenues is being directed towards citizens and investments.
The aid package arrives at a moment when new elections have been announced, raising questions about how economically sustainable such payouts are, whether they could further impact inflation and public debt, and, ultimately, who pays the price of such policies in the long run.
Šuković: This is no longer about economics, but politics
Economist and former member of the Anti-Corruption Council Dr Danilo Šuković says that in economics “there is no free lunch”, explaining that any spending of a portion of the gross national product must be settled at some point, with the only question being who will ultimately bear the cost.
He highlights that “some redistribution is inevitable”, but that here, as he puts it, “this is no longer about economics, but politics”. “If we had a functional state, then those political actions would have to be somewhat constrained, in the sense that they could not manipulate the economy as they pleased. But since we do not have a state, but rather a party and a one-party system, that partyocracy is able to do what it does – misusing national resources for its own party marketing and personal self-promotion,” he notes.
Šuković states that, in his view, “nearly all” media outlets are under government control, so such measures are presented to citizens as something that is good for them and as though the government is doing them a favour. “In reality, it is a matter of tremendous political marketing, especially because it is all happening right before the elections. It is so blatant that it is barely worth talking about anymore,” says Šuković.
There is no “extra money” in the budget; the poorest will ultimately be short-changed
Šuković stresses that there is no “extra money” in the state budget, and that any additional spending means there will be less money somewhere else. “There is no extra money. No one has extra money. In your own budget, if you hadn’t planned to go on holiday and you go anyway, you’ll have to cut back on food and other things. Therefore, there’s not much to argue about,” says Šuković.
He states that the government decided to spend the money in this manner for the sake of political marketing. “Therefore, the price of political security is being paid. Someone else will end up short-changed,” concludes Šuković.
He adds that, due to the redistribution of money, the poorest will ultimately lose out, assessing that Serbia lacks an adequate social policy. “We don’t even know how many poor people there are; the poverty line is non-existent, it is humiliating. No one can live on the income defined as the poverty line,” says Šuković.
He also notes that, according to his assessment, not even a third of the poor receive social assistance. “And yet over here, you hand out money equally to all citizens. Both to those who have billions, and to those who have nothing,” Šuković points out, assessing that such measures are adopted “for the purpose of these current political goals, namely staying in power.”
“It is obvious that no means are spared to retain power. As part of that, this is just another action where the end justifies the means. Unfortunately, that is how it is,” concludes Šuković.
Inflation will wipe out the aid citizens received
When asked whether one-off payouts to citizens, worth around a billion euros, could further drive inflation, Šuković responds in the affirmative. “Demand increases while supply stays the same. As soon as demand goes up and supply remains unchanged, it will affect prices. There is no doubt about that. The only question is by how much,” says Šuković.
He also assesses that, over the longer term, the aid given to citizens in this manner will be “wiped out” by inflation. Šuković believes that social and tax policies should be implemented through institutions and according to clearly established rules, so that all citizens have equal rights and obligations.
“We know how social policy is conducted, we know how tax policy is conducted, and that needs to be done consistently. That system should be set up so that no one is discriminated against and everyone has equal rights. And everyone who is supposed to pay tax should pay tax,” says Šuković.
He considers that an analysis of who pays taxes and who evades them would reveal additional systemic problems. “The poor pay taxes. The person who goes out in the morning to buy milk and bread pays tax immediately. Meanwhile, some who own offshore companies and register their businesses abroad evade taxes in a million ways, yet it gets a free pass,” notes Šuković.
In his assessment, such tax policy further deepens economic inequality.
According to him, the Gini coefficient, which measures income distribution inequality, is high in Serbia relative to the country’s national income level. “That means inequalities are inappropriately high – higher than they should be – and the gap between the rich and the poor is unacceptable. It is growing, society is becoming stratified, and that then leads to political instability and everything that goes with it,” concludes economist and former Anti-Corruption Council member Dr Danilo Šuković.
(Insajder, 09.09.2026)