During a recent government session, Finance Minister Siniša Mali highlighted two main pillars of Serbia’s proposed 2025 budget: improving the standard of living for citizens and further investing in capital projects.
According to Mali’s official statement on Instagram, this budget marks a significant milestone for Serbia as the first to be presented since the country received an investment credit rating. Mali emphasized that this achievement is the clearest validation of Serbia’s economic policies, with high expectations now placed on the government’s fiscal plans.
Key figures in the 2025 budget proposal
The budget proposal for 2025 forecasts total revenues and incomes at 2,346.2 billion dinars, a notable increase of 172.9 billion dinars (8%) compared to the revenue projections for this year. Tax revenues are expected to reach 1,985.1 billion dinars, while non-tax revenues are estimated at 325.7 billion dinars.
The proposed budget also includes total expenditures of 2,660.2 billion dinars, with a significant portion allocated for pension increases. Mali noted that the average pension in Serbia, which currently stands at 390 euros, will rise to 436 euros by next year, highlighting the promise of year-on-year pension increases based on the Swiss formula.
Economic performance and employment
Mali took pride in Serbia’s strong economic performance, particularly the 3.9% growth rate for the first three quarters of the year. He pointed out that despite the ongoing global challenges, including the pandemic, geopolitical tensions and the slowdown of the European economy, Serbia’s economy remains resilient.
Unemployment, which stood at a staggering 25.9% in 2012, has now dropped to a record low of 8.2%. Mali stressed the importance of Serbia’s record-high employment rates, growing foreign direct investments and the opening of new factories, which have contributed to a stronger job market.
Despite the global crises, Serbia has managed to maintain macroeconomic stability, with public debt currently standing at 46.5% of GDP. The country also has almost 6 billion euros in cash reserves, further strengthening its economic position.
Wage increases and public sector salaries
In line with its fiscal policy, the Serbian government plans to continue increasing wages, with an 8% wage increase for all public sector employees and 11% for those working in education. Mali emphasized the importance of improving salaries for educators, noting that the goal is to bring the average salary in the education sector closer to the national average.
Serbia’s minimum wage will also increase by 13.7% starting January 1, 2025. Mali noted that these salary increases significantly outpace inflation, ensuring that real incomes for Serbian citizens continue to grow.
According to Mali, the average salary in Serbia was 825 euros in August 2023, and it is expected to rise above 900 euros by the end of the year. By the end of 2025, the government plans to raise the average salary in Serbia to over 1,000 euros.
Investment and capital projects
Mali also announced plans for extensive capital investments, with a focus on infrastructure, agriculture, defense, and health. The budget for 2025 includes significant allocations for projects like the construction of high-speed roads, modernization of the army and support for Kosovo and Metohija. Agriculture will receive its largest-ever budget allocation of 149.5 billion dinars, representing 7.5% of the overall national budget.
Plans for 2027 include 323 major projects, with an estimated investment of 17-18 billion euros, including high-profile projects such as the EXPO and National Stadium.
Debt and economic stability
Mali emphasized that Serbia’s public debt remains low compared to other European countries, with a debt-to-GDP ratio of 46.5%. This is well below the Eurozone average of 88.1% and the global average of 93%. The finance minister also confirmed that Serbia’s deficit for 2025 will be capped at 3% of GDP, as agreed with the IMF.
Mali’s announcement of Serbia’s investment credit rating further reinforces the country’s economic stability and international credibility, while the government’s commitment to keeping public debt under control strengthens Serbia’s position for future economic development.
International relations and Germany’s economic influence
Mali also touched on the potential impact of Germany’s economic downturn on Serbia, given that Germany is Serbia’s largest trading partner. While Serbia may feel the effects of a weakened German economy, Mali stressed that Serbia’s economic strategy, focused on attracting investments and increasing domestic demand, has helped shield the country from the broader crisis that is affecting much of Europe.
Mali concluded by reiterating that Serbia remains committed to building partnerships with all countries, noting the country’s recent agreements with the UAE, Egypt and China. He emphasized that Serbia welcomes investors, provided they pay taxes and employ Serbian citizens.
Looking ahead
Mali’s outlook for Serbia’s economy remains optimistic, with a clear path toward achieving sustainable economic growth, higher wages and significant infrastructure improvements. With the government’s continued focus on maintaining macroeconomic stability, attracting foreign investments, and supporting the country’s most vulnerable citizens, Serbia is positioning itself for long-term prosperity.
