In December, Serbia recorded a budget deficit of 141.1 billion dinars, bringing the total deficit for 2024 to 212 billion dinars, as reported by the Ministry of Finance.
Despite having deposits worth 900 billion dinars (approximately 7.7 billion euros) in its account with the National Bank of Serbia (NBS) by the end of December, the state issued a dinar bond in January to raise 111 billion dinars. This raises the question of why Serbia continues to borrow when it holds significant reserves in the NBS, including 265 billion dinars in deposits and 635 billion dinars in foreign currency deposits by the end of the year.
Back in September, Minister Siniša Mali boasted about the country’s deposits, amounting to over six billion euros, with total state deposits reaching 1,073 billion dinars (just over nine billion euros) at the end of September. By December, these deposits had decreased to 900 billion dinars, yet the state still issued bonds for additional financing.
Despite holding substantial reserves, borrowing continues. Professor Milojko Arsić from the Faculty of Economics pointed out that while state deposits serve a purpose, the logic behind borrowing while holding such reserves remains unclear. Arsić suggested that deposits might be a precautionary measure, used to cover obligations if economic or credit conditions become volatile.
The state’s largest expenditures are pensions and salaries, which, combined, accounted for nearly half of the public spending in 2024. Pensions alone accounted for 23.8% of total public expenditures, followed by salaries at 22.9%. The government’s interest payments to domestic and foreign creditors also grew by 60 billion dinars, highlighting the increasing cost of borrowing.
With 2024 starting with 802 billion dinars in state deposits, the decline in reserves has raised questions about the management of funds, particularly as the government continues to borrow. While state spending remains high, including for pension and salary payments, the government’s continued borrowing despite significant reserves prompts further scrutiny.
