In the last ten years, Serbia’s public debt has more than doubled, i.e. by over 20 billion euros.
Opposition is critical of the government and its constant borrowing, while the government responds there is nothing to worry about as the state budget has enough funds to repay those loans.
Only recently, the Serbian government has been given 11 new loans, of the total worth of 1.35 billion euros.
“The government has managed to increase the public debt so much so that Serbia today is more indebted than ever before”, said Radomir Lazović, from the Green Front party. In response, the Serbian Finance Minister, Siniša Mali, said:” Serbia is much more economically stable than many stronger and larger countries. My message to the citizens of Serbia is that our public finances are extremely stable and that the public debt is absolutely under control.”
According to the Public Debt Administration, the public debt currently stands at 35.75 billion euros. This year, the government needs to repay around 6.8 billion euros, part of which is principal, and part is interest.
At the moment, the ratio of Serbia’s debt to gross domestic product is 50.5 percent, which does not worry the finance minister. However, if the Serbian economy grows faster than the Serbian government borrows, that ratio will improve and the debt will not be a noose around the neck of public finances. But, if the economy slows down and the government continues to borrow money, things will be completely different and there is a serious threat that country could become over-indebted.
The current numbers, as well as the projected ones, worry the former governor of the National Bank, Dejan Šoškić.
He says that the increase in public debt is already extremely high compared to the real growth rates of the country’s economy. It is especially problematic that we still import more than we export.
On the other hand, decision-makers stress that the public debt is below 60% of GDP, but this data does not reflect the actual situation well enough, according Mateja Agatonović, from Nova Ekonomija weekly.
“If what (Finance Minister) says it’s true, Serbia then has a better economy than France, Belgium or Japan, and worse than, say, Bangladesh and Morocco. The amount of borrowed money is not the only important thing, but the conditions of borrowing too. Globally speaking, lending conditions are getting worse,” he adds.
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