Serbia's Budget Deficit Balloons to 98 Billion Dinars

Serbia’s budget deficit reached nearly 98 billion dinars (833 million euros) by the end of July. In the same period of 2025, the shortfall was 22.9 billion dinars, making this year’s gap 4.3 times larger. In July alone, more money left the treasury than came into it, by more than 45 billion dinars.

The figure is all the more striking because the government spent that same month talking about a surplus. On July 27, at an extraordinary session of Serbia’s National Assembly, Finance Minister Sinisa Mali announced a one-time aid payment to pensioners, war veterans and welfare recipients on September 14, and to all adult citizens on September 22. He explained where the money would come from:

It comes precisely from that surplus, because our tax revenue in the first seven months of this year is more than 40 billion dinars above what we had planned.

The exact size of that aid package, about 600 million euros, was announced by President Aleksandar Vucic. The 2026 Budget Law does not provide for this payment.

Why did the shortfall appear precisely in July?

The numbers point to two causes. The first is capital spending, which reached almost 82 billion dinars in July, the highest of the year so far. In June it was 41.2 billion dinars, and in July 2025 it was 27.3 billion dinars.

The second is a one-time payment. On July 27, the budget paid out 58.7 billion dinars (about 500 million euros) as part of the fourth installment for 12 French Rafale fighter jets, which we have already reported on. That installment totals 686.25 million euros and, under the commercial contract with Dassault Aviation, was not due until January 29, 2027. It was paid, in other words, almost exactly six months ahead of schedule, leaving 186.25 million euros of that installment still to be settled by January 2027.

The payment schedule for the Rafales so far looks like this:

• two advances of 411.75 million euros each, in October 2024 and April 2025
• a third installment of 686.25 million euros, paid in two tranches, in December 2025 and January 2026
• part of a fourth installment, about 500 million euros, in July 2026

Until this year, July was the month when the budget filled up. From 2021 to 2025, state revenue exceeded spending in July by 36, 37, 23, 42 and 13.5 billion dinars respectively.

Spending is outpacing revenue

Budget revenue in the first seven months came to 1,460 billion dinars, against 1,318 billion dinars a year earlier, a nominal increase of 10.8%. Spending over the same period was 1,558 billion dinars, against 1,341 billion dinars, up 16.2%.

The gap between those two growth rates is the whole problem. When spending grows roughly half again as fast as revenue, the balance worsens even as tax collection rises. The deficit thus jumped from just under 23 billion to 98 billion dinars, a rise of 326%.

Borrowing and public debt

Thirteen days before the payment to Dassault, on July 14, the state borrowed 500 million euros for the first time through a private bond placement. The bonds mature in July 2032, carry a coupon rate of 4.75% and a yield of 5.013%. That is the price at which the state borrowed, and it sits above the interest domestic banks pay on citizens’ term savings.

The decision, signed by Prime Minister Djuro Macut, states that the bonds were sold in advance to known institutional investors to finance capital spending on the army modernization program. The public still does not know who the buyer was.

Public debt stood at 41.8 billion euros on August 1, 2026. In July 2012 it was 15.8 billion euros, so 2.6 times smaller.

What comes next before year end

Two items are already known, and neither appears in the 2026 Budget Law: the September one-time aid payment of about 600 million euros, and the remaining 186.25 million euros for the Rafales, due in January 2027.

On top of that, the second half of the year has historically been worse for the treasury. In the last five months of 2025, the deficit grew to 271.4 billion dinars (about 2.3 billion euros), 11.8 times more than in the first seven months of that year. This year, August begins with a starting deficit of 98 billion dinars, instead of 22.9 billion.

The next data point to confirm or contradict that pattern will be the budget execution report for August, which the Ministry of Finance publishes at the end of next month.