A new investigation alleges that billions of euros have been drained from Serbia’s state budget through corruption, political patronage, and tax fraud linked to the period of governance by the Serbian Progressive Party (SNS).
According to the analysis, around €4.2 billion is estimated to have “disappeared” from public finances, including €1.8 billion spent on tens of thousands of allegedly незаконно placed public sector employees and €2.4 billion lost through various tax fraud schemes. The shortfall in revenue, the investigation claims, was compensated by increasing public debt.
The research, presented by economist Duško Vuksanović, argues that government narratives about fiscal consolidation masked deeper structural problems in state finances. Measures implemented between 2015 and 2017, including a 10% reduction in pensions and public sector wage bases, generated savings of about €470 million annually, or roughly €1.4 billion over three years.
However, the report suggests these savings were effectively used to cover rising costs associated with politically driven employment in the public sector, rather than strengthening public finances.
One example cited in the investigation involves Elektroprivreda Srbije (EPS), where unlawful payroll expenses for employees were estimated at around €100 million in certain periods. Over time, increasing personnel costs allegedly diverted funds away from investment and maintenance, which analysts say contributed to major operational failures at energy facilities.
The report also highlights significant weaknesses in tax collection, particularly within Serbia’s Tax Administration of Serbia, where the number of employees has steadily declined over the past decade. A shortage of inspectors and weakened oversight allegedly allowed VAT fraud to expand, leading to average annual revenue losses of about €400 million.
Data cited in the analysis show that VAT revenues from domestic trade dropped sharply after 2016, despite stable tax rates and economic growth. Revenues reportedly recovered only after mandatory electronic invoicing was introduced, which resulted in a dramatic increase in tax collection.
The investigation concludes that the combined impact of increased spending on politically connected employment and reduced tax revenues has had serious consequences for Serbia’s economy and institutions, raising questions about governance, accountability, and the long-term stability of public finances.
