Over the past decade, Serbia’s public debt has doubled, soaring by more than 20 billion euros. While the opposition lambasts the government for its continuous borrowing spree, authorities counter that there’s no cause for concern, citing the ample state budget reserves available for servicing these loans.
Recently, Serbia’s government secured 11 fresh loans, totaling 1.35 billion euros.
“The government has increased public debt so dramatically that Serbia is now more indebted than ever before,” asserted Radomir Lazović from the Green Party.
In response, Serbia’s Finance Minister Siniša Mali assured, “Serbia boasts greater economic stability than many larger and more powerful nations. My message to the citizens of Serbia is that our public finances are extraordinarily stable, and public debt remains entirely manageable”.
As per the Public Debt Administration, Serbia’s public debt now stands at 35.75 billion euros. This year, the government faces the obligation of repaying approximately 6.8 billion euros, encompassing both principal and interest.
Serbia’s debt-to-Gross Domestic Product (GDP) ratio presently stands at 50.5%, a statistic that does not perturb the Ministry of Finance. Should Serbia’s economy outpace the pace of government borrowing, this ratio will ameliorate, and debt will cease to obstruct public finances. However, should the economy decelerate while the government persists in borrowing, the scenario could prove markedly different, with a substantial risk of the country plunging further into debt.
Current and anticipated figures are a source of concern for Dejan Šoškić, the former governor of the National Bank.
He contends that the surge in public debt greatly outpaces the nation’s actual economic growth rate. Of particular concern is that Serbia continues to import more than it exports.
Conversely, decision-makers highlight that public debt remains below 60% of GDP, although these statistics do not wholly encapsulate the real situation, as noted by Mateja Agatonović of the “Nova Ekonomija” newspaper.
“If the Finance Minister’s claims hold true, then Serbia’s economy surpasses that of France, Belgium, or Japan, yet lags behind countries like Bangladesh and Morocco. The quantity of borrowed funds is not the sole determinant; borrowing conditions hold equal significance. Globally, lending conditions are worsening,” he emphasizes.
