Serbia's external debt stock declined for a second straight month at end-March 2014, dropping by 4.6% y/y to EUR 25.5bn and deteriorating from a 4.2% y/y contraction the month before, central bank (NBS) data showed on May 20. March’s decrease was driven by falling indebtedness to the IMF and other creditors.  

According to IntelliNews calculations, the foreign debt equalled to 78.6% of the full-year GDP forecast, down from 83.6% a year ago. On a monthly basis, the external debt edged down 0.4% at end-March, following a 1.0% m/m drop at end-February.

Long and medium-term public sector borrowing retreated 3.8% y/y to EUR 13.0bn at end-March after going down by 1.8% y/y the month before. Long and medium-term private external indebtedness declined for a seventh straight month in March, shrinking 3.9% y/y to EUR 12.4bn, albeit narrowing from a 4.9% contraction at end-February.

The short-term external debt stock, which has been on a steady downward trend since July 2010, plunged 58.0% y/y to EUR 151.5mn at end-March, easing from a 61.8% annual drop the month before. The reading continues to be dragged down by both falling banking sector and corporate liabilities.

Serbia's external debt stock inched up 0.5% y/y to EUR 25.8bn at end-2013, easing from a 6.6% growth the year before, as rising long-term public indebtedness was partly offset by falling banking sector foreign liabilities

We expect higher public sector external liabilities to remain the key driver of Serbia’s foreign debt growth in 2014 due to rising fiscal imbalances.