Serbia increased public investment sharply in the first seven months of 2026 while keeping government debt at around 44% of GDP, as infrastructure and Expo-related expenditure remained central to the country’s growth strategy.
The general government recorded a fiscal deficit of RSD 105 billion, roughly €900 million, in January-July.
Government revenue increased 11% year on year, supported by social-security contributions, VAT, non-tax income and higher corporate profit-tax receipts.
Expenditure rose faster, by 15.1%, reflecting higher wages and pensions, purchases of goods and a sharp increase in capital spending.
Capital expenditure reached RSD 394.4 billion, or about €3.4 billion, during the seven-month period, almost RSD 100 billion more than a year earlier.
That represented around 55% of the capital expenditure planned under the fiscal strategy.
Despite the spending acceleration, general-government debt stood at 44.2% of GDP at the end of July, while central-government debt was 43.9%.
The relatively stable debt ratio gives Serbia more fiscal space than countries entering major investment cycles with debt already close to EU Maastricht thresholds.
But the scale of current investment means financing strategy remains important.
Serbia raised around €3 billion on international markets in April through three eurobond tranches with maturities of five, 10 and 12 years.
The longer maturity structure reduces near-term refinancing concentration, while the government is simultaneously developing the domestic dinar bond market.
That combination allows Serbia to diversify between domestic local-currency borrowing and international euro financing.
The fiscal equation becomes more demanding if capital spending does not translate into higher productivity and future tax revenues.
Infrastructure can support potential growth by reducing transport costs and attracting private investment, while Expo-linked spending has a more temporary component.
The distinction will become more visible after 2027.
For now, Serbia is financing one of the region’s larger public-investment programmes without a corresponding jump in its debt-to-GDP ratio.
The longer-term test is whether the assets built during the current cycle generate enough additional economic activity to keep debt on a manageable path once extraordinary construction spending and Expo-related growth fade.
