The Serbian government’s deposits held at the central bank (NBS) grew 13% m/m to RSD 198bn (EUR 1.7bn) at end-July after declining in monthly terms since March 2013, central bank data showed. Subdued goods and services and subsidies spending following the endorsement of the 2013 budget rebalance resulted in a record low consolidated budget deficit of RSD 2.4bn in July.

In annual terms, state deposits more than doubled, lifted by Serbia’s three Eurobond issues since September 2012 worth a combined USD 3.3bn. The government deposits at the NBS equalled 5.3% of the full-year projected GDP at end-July, up from 2.9% of GDP a year earlier, according to IntelliNews calculations.

Dinar state deposits rose 75% y/y and 28% m/m to RSD 90bn at end-July. Foreign currency deposits calculated in dinars stood at RSD 108bn at end-July, up 3% m/m and 132% y/y. They accounted for 55% in total state deposits.

Serbia is under pressure to cut budget spending and reach an agreement with the IMF in order to improve foreign investor’s confidence.

Investor appetite for Serb government securities has weakened since mid-May, reflecting both internal and external factors. In August, the country borrowed the equivalent of EUR 189mn on the local market, 66% of the monthly plan.