The First Deputy Prime Minister and Minister of Finance in the technical mandate, Siniša Mali, recently boasted that even after the payout of financial aid to pensioners totalling 50 billion dinars, the state still has 460 billion dinars in its account, which is around €3.9 billion.
However, the major part, if not all of these funds, actually originates from borrowing. Then, in April, the state borrowed an additional half a billion euros through a bond issue that was neither public nor announced in advance, and without any information regarding who the buyer was.
In any case, Serbia’s public debt at the end of July stood at €41.8 billion, or 43.9% of GDP, according to data from the monthly report of the Public Debt Administration.
The largest part of the debt relates to external debt, which stood at €29.2 billion, and internal debt, amounting to €10.9 billion. In addition, based on indirect liabilities classified as public debt, there is also a debt of around €1.7 billion.
Government securities issued on the domestic market, at €8.6 billion, make up the largest share of the internal debt. Similarly, bonds dominate the external public debt, amounting to nearly €13 billion.
Based on loans from commercial banks, the state owes €5.3 billion.
Borrowing from the International Bank for Reconstruction and Development accounts for €2.2 billion, while borrowings from the International Monetary Fund stand at around €2 billion.
On the list of external debt creditors, the Export-Import Bank of China is in third place with €2.7 billion. In fourth place are foreign governments, whose loans amount to €2.5 billion.
The share of public debt in GDP is 43.9%, whereas in December of last year, with a slightly lower debt, it stood at 44.4%. This calculation, which seems strange at first glance, comes about because the Ministry of Finance compares the debt amount with the gross domestic product (GDP) projected for the end of this year.
The share of general government debt in GDP is 44.2%.
The majority of the debt is in euros, as much as 63%, whilst 20.6% is in dinars, and 11.1% in dollars. Fixed interest rates make up 67.9% of the debt, and variable interest rates 32.1%.
Variable interest rates consist of 72.3% EURIBOR and 15.6% the interest rate on Special Drawing Rights (SDR), while BELIBOR makes up 12%.
Eurobonds have for years been the main source of financing budget deficits. Six or seven years ago, during a period of low interest rates, this was also a fairly cheap way of borrowing. For instance, the ten-year bonds issued in 2019 to the tune of €1.55 billion carried a coupon of 1.5%. However, in three years these bonds mature and will have to be replaced with far more expensive ones. For example, Eurobonds issued this year carry coupons ranging from 4.75% to 5.5%.
Thus, the interest rate on the $1.25 billion debt from May of this year is 5.5%, with a yield of 5.8%. Two series of euro-denominated bonds were issued on the same day as well: one worth €1 billion for five years carried an interest rate of 4.25%, and another worth €900 million for 12 years carried 4.875%.
The money from this borrowing will likely be used to repay the debt based on €2 billion of bonds issued in 2020 at an interest rate of 3.125%, or the €1 billion maturing in September 2028 with an interest rate of 1.26%.
As a consequence of rising interest rates on bonds, the cost of servicing interest on the public debt has also increased, which, according to the budget rebalance for this year, amounts to 197.4 billion dinars, or €1.7 billion.
Economist Saša Đogović claims that although public debt as it currently stands does not present a problem in itself, the passivity of the institutions managing it could make it one. He also states that the projects in which money is currently being invested in Serbia, such as the purchase of foreign armaments and the construction of a national stadium and a dolphinarium, will not contribute to the repayment of that debt. Instead, Đogović suggests a turnaround in the state’s economic policy.
As he states, the IT and construction sectors have been “dragging” the Serbian economy for years, and next year Expo will contribute to heightened growth due to the service sector. However, the very next year brings uncertainty in the economic sphere.
“One swallow does not make a summer, and already next year we will not have those high growth rates; that is impossible. So the overall growth and export rates will visibly flatten out starting next year, and then that will also reflect negatively due to the negative trend in the influx of foreign direct investment. These are all indicators which speak to the fact that a fundamental strategic pivot in economic policy is essential, the basic foundation of which is the operation of stable and independent institutions, a systemic fight against bribery and corruption, and the promotion of the rule of law,” Đogović said.
He also touched upon the Serbian diaspora, which likewise has the potential to contribute to the development of the Serbian economy through investment and the strengthening of domestic entrepreneurship, which will only be possible once the “institutions are liberated.”
(Danas, 16.09.2026)
https://www.danas.rs/vesti/ekonomija/javni-dug-kome-srbija-duguje/