The Serbian government’s deposits held at the central bank (NBS) jumped 49.6% to RSD 260bn (EUR 2.2bn) at end-December 2013, recording the highest end-year level since 1999 (latest available), central bank data showed. The reading was bolstered by Serbia’s two Eurobond issues in February and November 2013 worth a combined USD 2.5bn. In monthly terms, state deposits likewise climbed 40.2% in December as FX deposits doubled.

The government deposits at the NBS equalled to 6.9% of the full-year GDP forecast at end-December, up from 5.1% of GDP a year ago, according to IntelliNews calculations.

Dinar state deposits increased 64.4% y/y to RSD 111.3bn at end-December. In monthly terms, government deposits in RSD edged up 0.8% at end-December. Foreign currency deposits, calculated in dinars,  climbed 40.0% y/y and 98.0% m/m to RSD 149bn at end-December. They accounted for 57% of total state deposits.

Serbia plans to borrow EUR 5.6bn in 2014 to service its debt and finance its budget gap which should reach 7.1% of GDP. The government is considering placing EUR 750mn Eurobond in 2014, finance minister, Lazar Krstic, has said earlier in January.

The foreign investors' demand for Serb government securities has increased since October reflecting both external (ECB’s decision to cut its benchmark interest rate to 0.25% on Nov 7) and internal factors (falling inflation and budget austerity measures). Nonetheless, the anticipated early elections in the country in March could negatively impact investor’s confidence in the coming period.