Serbia’s revised fiscal strategy for 2026–2028 is built around a clear official baseline: slower growth in 2025, recovery in 2026, acceleration in 2027 around EXPO 2027, and a gradual return toward a lower fiscal deficit after the peak investment cycle. The strategy projects real GDP growth of 2.3% in 2025, 3.0% in 2026, 5.0% in 2027 and 3.5% in 2028, while inflation is expected to ease from 3.9% in 2025 to 3.7% in 2026, 3.5% in 2027 and 3.0% in 2028.
The document’s central economic message is that Serbia is entering a more difficult planning cycle. The Government acknowledges that the earlier 2025 GDP growth projection of 3.0% has been cut to 2.3%, mainly because domestic socio-political tensions, weaker investment dynamics, construction weakness and global trade fragmentation have slowed activity. For 2026, the growth forecast has also been revised down from 4.2% to 3.0%, which signals a more cautious macro framework than the previous strategy.
The most important part of the strategy is fiscal. Serbia plans to keep the consolidated fiscal deficit at 3.0% of GDP in 2025, 3.0% in 2026 and 3.0% in 2027, before reducing it to 2.5% in 2028. Public revenues are projected at 40.9% of GDP in 2026, declining slightly to 40.0% of GDP in 2028, while expenditures are projected at 43.9% of GDP in 2026, falling to 42.5% of GDP in 2028. Public debt is expected to decline from 45.0% of GDP in 2025 to 44.5% in 2026, 44.3% in 2027 and 44.1% in 2028.
This means Serbia is not pursuing austerity. It is pursuing controlled expansion. The fiscal framework allows high public investment to continue while keeping debt below the Maastricht-style 60% of GDP threshold and below Serbia’s own recent debt levels. The key assumption is that growth, nominal GDP expansion and disciplined current expenditure will offset the borrowing needs created by infrastructure, energy, transport and EXPO-related projects.
The investment cycle is the core of the strategy. The Government explicitly links the medium-term fiscal framework to the “Leap into the Future – Serbia 2027” programme and EXPO 2027. Capital spending is focused on road, rail, communal and water infrastructure, but also includes health, energy, environmental protection, education, culture and defence. The strategy says that capital expenditure will decline as a share of GDP over time, but remain high in absolute terms.
That creates a strong short-term growth impulse but also a concentration risk. Serbia’s 2027 growth forecast of 5.0% depends heavily on the successful execution of EXPO-related and infrastructure projects. If project implementation is delayed, procurement slows, construction bottlenecks appear, or financing costs rise, the growth profile could undershoot. The official baseline is therefore investment-led and execution-sensitive.
The revenue structure shows continued dependence on consumption, labour income and social contributions. Public revenues are projected to rise from RSD 4,244.3bn in 2025 to RSD 4,534.5bn in 2026, RSD 4,826.7bn in 2027 and RSD 5,120.4bn in 2028. VAT rises from RSD 1,002.0bn in 2025 to RSD 1,243.9bn in 2028, while social insurance contributions increase from RSD 1,372.2bn to RSD 1,777.3bn over the same period.
That revenue profile assumes continued wage growth, formal employment resilience and solid domestic consumption. It also means that any deeper labour-market slowdown, emigration-driven employment weakness or private consumption shock would quickly affect fiscal performance.
The external position is one of the weaker points. The current account deficit is projected at 5.3% of GDP in 2025, widening to 6.0% in 2026, before narrowing to 4.9% in 2027 and 5.1% in 2028. This suggests Serbia’s investment-led model will keep import demand high, especially for equipment, energy, construction materials and intermediate goods.
The strategy also directly recognises CBAM as a coming macroeconomic issue. It notes that the EU Carbon Border Adjustment Mechanism from 2026 could affect Serbian exports of cement, iron, steel, aluminium, fertilisers, hydrogen and electricity, with fuller effects to be presented in the next fiscal strategy. This is important because Serbia’s fiscal framework still treats CBAM as a future risk rather than a fully quantified fiscal and competitiveness variable.
The SOE section is one of the most important fiscal-risk areas. State-owned enterprises reported a positive net result of RSD 10.9bn in 2024, after a much stronger RSD 113.7bn in 2023, which was heavily influenced by the historic profit of Elektroprivreda Srbije. By Q2 2025, monitored SOEs had a net result of RSD 18.9bn, but the number of loss-making SOEs increased to 16, compared with 9 in 2024.
SOEs remain a recurring fiscal exposure through subsidies, guarantees and potential debt servicing. In 2024, subsidies to 36 monitored SOEs amounted to RSD 62.3bn, or 2.6% of total Republic budget expenditures. The largest recipients included Infrastructure of Serbian Railways, Roads of Serbia, Elektrodistribucija Srbije, PEU Resavica and SrbijaVoz.
Guarantees are even more significant. For 2025, the planned issuance of guarantees totals RSD 365.4bn, with Elektroprivreda Srbije alone accounting for RSD 276.7bn, or 75.7% of the total. The largest EPS-backed item is the project for 1 GW of self-balancing solar power plants with battery energy storage systems, valued at RSD 222.8bn in planned guarantees. Other guarantee users include Srbijagas, Elektrodistribucija Srbije, Transnafta, Srbijavoz and Elektromreža Srbije.
This is where the fiscal strategy becomes an energy-sector strategy. Serbia’s fiscal risk is increasingly tied to energy investment, electricity system transformation, gas infrastructure, distribution reliability and SOE governance. The state is using guarantees to accelerate strategic energy projects, but this also transfers part of project and repayment risk onto the public balance sheet.
The document recognises this and states that guarantees may now be issued only for capital investments, not for current operations or liquidity needs. That is a positive discipline measure, but it does not remove the risk. If SOEs fail to generate sufficient cash flow from these projects, guarantee exposure can still become a budget cost.
Debt management is presented as conservative and market-oriented. The strategy emphasises transparent borrowing, predictable issuance, development of the government securities market and management of refinancing, interest-rate and currency risk. Public debt is defined broadly to include direct liabilities and guarantees issued for public enterprises, local governments and other legal entities.
The stress-test section is important. In an adverse simulation, the deficit could rise to 9% of GDP, real GDP could contract by 3.5%, and public debt could jump to 53.7% of GDP. Under a gradual adjustment scenario, debt could move above 55% of GDP by 2030, before stabilising if growth returns and deficits are reduced.
That tells investors two things. First, Serbia’s baseline debt path is comfortable. Second, the debt path is not immune to a combined shock of lower growth, higher expenditure, weaker revenues and higher financing needs. The fiscal position is strong enough for normal volatility, but not unlimited.
The strategy’s strongest points are the low public-debt ratio, continued access to financing, large public investment pipeline, banking-sector stability, and the fact that Serbia has avoided a high-debt trap despite repeated external shocks. Its weakest points are dependence on public investment, SOE-related contingent liabilities, external-account pressure, construction execution risk, political uncertainty, and unquantified CBAM exposure.
For banks, investors and project developers, the practical reading is clear: Serbia remains fiscally investable, but the quality of growth now matters more than the headline growth rate. Projects connected to infrastructure, energy, grid modernisation, rail, water, digitalisation and EXPO-related works will remain supported by the state. However, financing risk will increasingly depend on procurement transparency, SOE balance-sheet strength, implementation speed, debt guarantees and whether Serbia can convert public investment into productivity rather than only short-term construction demand.
The revised strategy is therefore not a crisis document. It is a controlled-expansion document written under higher uncertainty. Serbia is trying to preserve fiscal credibility while running a large state-led investment cycle. The success of that model will depend on whether 3.0% deficits, 44% debt, 5.0% growth in 2027 and major energy-infrastructure guarantees can coexist without creating a new layer of fiscal risk after EXPO 2027.
