Since the beginning of 2025, the Serbian government has issued 117 decisions reallocating tens of billions of dinars from the budget reserve, according to the Official Gazette. Most of these transfers are based on limited or incomplete explanations, raising concerns over transparency, Forbes reports.
IMF evaluation and Fiscal Strategy:
The practice is under review in coordination with the International Monetary Fund (IMF), which conducted a fiscal transparency evaluation earlier this year. The results, expected in the coming months, are anticipated to highlight existing problems and propose solutions. Serbia may adopt changes to budget reserve use as part of its obligations to the IMF. The 2026 Fiscal Strategy notes ongoing analysis of tax expenditures with IMF support, though the first report will only be available next year.
Concerns over current practices:
The Fiscal Council of Serbia has long criticized the broad and opaque use of the budget reserve. Originally intended for small, unforeseen expenses, the reserve has frequently financed ad hoc measures, local government shortfalls, and other expenditures not approved through public debate or strategic planning. Such practices deviate from international norms.
Limits and oversight:
Current law only caps the reserve at 4% of state revenues—a limit that has gradually increased from 1.5% over the years. The Fiscal Council recommends stricter rules, including legally defined criteria for using reserve funds and reducing the limit to 2–3% to prevent overuse.
Confidential allocations:
From 2018 to 2022, approximately €720 million (38% of reserve spending) was allocated under confidentiality rules, with a large share directed to the Government General Secretariat. Many of these expenditures were unrelated to national security, highlighting the need for greater transparency.
Next steps:
Decisions on reforming the use of the budget reserve will depend on the forthcoming IMF analysis. Until then, the practice of broad and confidential reallocations remains in effect, with recent Official Gazette entries as recent as August 29 continuing the trend.
