What do we owe to whom?

...

Total external debt Serbia is "balancing" at around 48-49 billion euros during 2025, according to the latest data National Bank of Serbia (NBS). She also announced that at the end of June 2025, the public external debt amounted to 25,56 billion euros, while the private external debt was slightly lower - 23,09 billion euros.

Observing the amounts of Serbia's external debt, it is noted that, after relative stagnation during the second decade of the 21st century, in the period from 2019-2025 (see table), there was a significant increase in the state's external debt. Thus, since the end of 2019, the last relatively "normal" year before covid and a whole series of conflicts shaking the planet, the public external debt of Malta has doubled - from 13,87 to 25,56 billion euros.

Private external debt, which was higher than public debt at the end of 2019, progressed at a slower pace and amounted to 23,1 billion euros at the end of June 2025.

WHO ARE OUR CREDITORS?

Who did the state borrow from abroad?

According to NBS data, the largest part of the public external debt goes to issued government securities - about 8,8 billion euros. The next largest creditor is foreign governments and their development banks and agencies: Serbia owes them another 6,6 billion euros.

After them, it owes the International Monetary Fund (2,3 billion euros), the International Bank for Reconstruction and Development (IBRD) a total of 2,16 billion and the European Investment Bank (EIB) – 1,74 billion.

It is also worth mentioning the "explosion" of loans given to Serbia by "other creditors", as managed by the NBS - of 1,8 million euros, which Serbia owed on this basis at the end of 2019, and in June that figure was 2,42 billion euros. A significant increase in debt to the Development Bank of the Council of Europe (CEB) was also noticeable - from 196 million euros at the end of 2019 to 731 million euros in mid-2025.

According to the same source, when it comes to private external debt, in June 2025, companies in Serbia owe 18,26 billion euros in the medium and long term, and banks 3,16 billion. In the short term (up to a year), companies in Serbia still owe 1,3 billion, and banks 325 million euros.

In the last quarterly report of the Public Debt Administration (part of the Ministry of Finance) from July this year, it is stated how much the state's internal debt is. Thus, according to the data of the Public Debt Administration, the state still owes 9,2 billion euros for securities issued on the domestic market. Based on loans from commercial banks, the state owes 1,23 billion, and it is interesting that Serbia is still "coughing up" old foreign currency savings - on that basis, it owes another 366 million euros.

Some data are significantly different in the report of the Public Debt Administration and in the aforementioned publication of the National Bank. Thus, according to the Administration, Serbia has an external debt of 10,3 billion euros for government Eurobonds. Data differ even for the same creditor: for example, the NBS claims that the debt to the European Investment Bank at the end of June 2025 amounted to 1,74 billion, while the Administration says 1,49 billion on the same date.

According to the data of the Public Debt Administration, Serbia's debt to the Chinese Export-Import Bank amounts to 2,83 billion euros - more than to the IMF (2,3 billion), the International Bank for Reconstruction and Development (2,16 billion), the French Development Agency (212 million), the German Development Bank (190 million)... At the same time, the state on the internal market guarantees nearly half a billion euros of loans issued, while those guarantees on the external plan rise to 1,73 billion euros.

For whom does the state guarantee all these debts? The most for Elektroprivreda Srbije (EPS) - Serbia "holds back" EPS for a total of 624,5 million euros. Apart from EPS, the state also guarantees half a billion debt of Srbijagas, almost 200 million euros of debt of railway companies (mostly Srbijavoza - 123 million), and there is also a guarantee for 165 million euros of debt of "Roads of Serbia".

These are not the total debts of these companies, but debts guaranteed by the state of Serbia - if something goes wrong, these debts are transferred to the state.

When all this is added up - the internal and external debt of the state, together with indirect obligations and guarantees given for the borrowing of local authorities, the total public debt of Serbia is 38,8 billion euros.

Is this a lot?

DO WE KNOW HOW TO COUNT?

Public debt is measured and compared not in absolute amount, but in relation to gross domestic product. So, in less than six years, the public debt increased from 24 billion to the aforementioned 38,8 billion euros, but at the same time - specifically in June of this year - according to the data of the Ministry of Finance, that debt had a record low ratio to the gross domestic product (GDP): 43,4 percent, which is the lowest ratio since 2011, when, thanks to the rotten compromise of the previous government, the public debt started to grow suddenly, due to unsustainable increases in pensions.

Well, there's a "but" there.

Namely, readers may remember the dramatic news there from 2014, when the public debt, due to two years of inaction by the then new government, rose to 70, and then in 2015 to 77 percent of GDP. However, when we look today at what the public debt was back then, in 2014 and 2015, we see different figures. Officially, at the end of 2014, public debt amounted to 63,4 percent of GDP, and in 2015 – 67,2 percent of GDP.

Where did this change come from?

This is where we come to the audits carried out by the Republic Statistical Office (RZS). Namely, in the period 2014-2024, RZS conducted three major revisions of the gross domestic product and each time subsequently established that in the previous period the GDP was actually significantly higher than was initially recorded. In total, in those three revisions, RZS increased the gross domestic product by nearly 20 percent. Therefore, as the GDP "on paper" increased, the public debt was reduced in the same way. These are audits that are normally done periodically every five years. However, according to the statements of the members of the Fiscal Council, after the last revision, this GDP increase of almost 20 percent was "significantly more than in most other European countries".

At that time, some members of the Fiscal Council stated that they do not think that the state is "making up" the GDP at will, but that it is a question of the unreliability of RSO data due to a significant lack of capacity, that is, the small number of employees in RSO compared to comparable countries. Such unreliability of data, of course, entails other problems. If the basic figures are really so different than they were when we made plans and created policies based on those plans, is that why the aforementioned policies and plans were largely missed...

"Major changes to probably the most important macroeconomic indicator, such as have been happening in Serbia for a decade, are not common in other European countries. They significantly complicate the correct management of economic policy, which in regulated countries must be based on quality and timely data," announced the Fiscal Council after the last audit in 2024.

Thus, although we now "estimate" that the current public debt is around 43 percent of GDP, it does not mean that it will not change in a few years and be significantly lower or significantly higher.

But there is another clear data that shows whether the indebtedness of the state is high or not, and that is the annual amount that the state must pay for the interest on its debt.

PRICE OF RIDING ON CHEAP MONEY

When evaluating the budget for 2025, the Fiscal Council warned that the item with the greatest growth in the proposed budget is precisely the one that should pay interest on the public debt. According to the budget for 2025, interest expenses have increased by as much as 19 percent, i.e. to 1,9 billion euros in absolute terms.

This increase is not only a consequence of new borrowings, but also the worsening of borrowing conditions - as the state "rode" for a very long time on the wave of zero interest rates and an abundance of cheap money, it has been in a period for years now when money is significantly more expensive and less favorable.

But what does that 1,9 billion euros mean, apart from the fact that it is, of course, a huge amount of money that could solve some big problems that Serbia has not solved for years?

As with public debt, the ratio of these interest costs to GDP is observed. In the case of Serbia, interest amounts to about 2,1 percent of GDP, Radio Free Europe wrote recently. We can already see that the situation is quite unfavorable: these 2,1 percent of GDP that go to interest are quite higher than the average of the countries of Central and Eastern Europe, where they allocate around 1,4–1,6 percent of GDP for this purpose. This practically means that Serbia - although it does not have a high public debt in relation to GDP - borrows at the prices at which countries with a significantly higher share of public debt in relation to GDP borrow.

Or, as the Fiscal Council wrote: "Due to significantly higher interest rates, a direct comparison of the level of deficit and public debt of Serbia with EU countries can be misleading, because the same level of debt creates a greater burden on our budget. Higher borrowing costs impose on Serbia the need to strive for a structurally lower level of deficit and public debt in the long term compared to more developed EU countries - and this need is further emphasized in the current international environment characterized by relatively high interest rates, which will likely remain elevated in the medium term."

This October, "Vreme" celebrates and honors - as much as 35 percent discount for our 35th birthday! Valid for semi-annual and annual subscriptions. Subscribe now!