SERBIA Trends and Developments Contributed by: Miodrag Jevtić, Gecić Law
Gecić Law Nikole Spasića 2 11000 Belgrade Serbia Tel: +381 11 4043 570 Email: office@geciclaw.com Web: geciclaw.com
Introduction Acquisition finance in Serbia has been embed- ded in the traditional sources and structures of funding, and this trend has mainly been fol- lowed in 2024 and 2025 M&A deals. However, recent years have seen interest in raising capi- tal through corporate bonds, a landmark case of the Eurobond issue, and the emergence of management buyouts through specific deriva- tive financial instruments (mainly in the IT indus- try). Hybrid and complex cross-border financial products as means of acquisition financing still face specific entry barriers imposed dominantly by Serbian FX rules. Serbia has announced its green bonds and ESG agenda, which is expect- ed to have its place in the future structuring of acquisition financing. Serbian Macroeconomic Environment Several macroeconomic factors have recently influenced the financing and volume of M&A. Serbia faced a sharp increase in interest rates on loans from 2022, mainly as a spillover from the European loan markets and the end of an era of cheap money. This is primarily because European banks own the most significant chunk of the Serbian banking sector, and the loans are largely euro-denominated. However, 2024 saw a stabilisation of loan interest rates, allowing for more predictability in M&A financing. Nonethe-
less, the interest rates remain higher than before 2022, which influenced some Serbian compa- nies to consider sourcing the necessary funds via capital markets, ie, corporate bonds (dis- cussed further in the text). The inflation tide that struck globally in 2021 did not miss Serbia. Thanks to the decrease in import prices, stabilisation of energy prices, and effective and continuous monetary policies of the National Bank of Serbia (NBS), inflation has been cornered within the trajectories planned by NBS in 2024, and it is expected that such a trend will continue throughout 2025. Despite the inflation and global economic crisis, the Serbian dinar has been very stable for the last five years and more (in its exchange for the euro). NBS applies a floating exchange rate sys- tem that, in combination with the steady inflow of the euro, has proven effective so far. Serbia demonstrated economic resilience, with GDP growth projected at 4.5% for 2025 and expectations of 4–5% growth for the following two years, according to NBS. Foreign Direct Investment (FDI) reached unprec- edented levels in 2024, with inflows of EUR5.2 billion, representing a 7.9% increase compared to the previous year. These investments are nota-
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