Poverty is not a side effect of the corruption looting of the budget of epic proportions, but its functional part – the Economy

This address is another in a series of attempts to spin a hot pre-election topic among pensioners for the purpose of disciplining the already submissive, but this time it’s just a point blank shot. Poverty in Serbia will remain largely present not because of a lack of money, but because of the abuse of people who desperately need help.

Serbia is a country that spends public resources in the wrong way, and this is not a coincidence, but a consequence of specific political decisions of the government, which has an interest in not solving poverty, but in managing it. The government regularly points to GDP growth as proof of success, but economic growth and poverty reduction are not the same thing. The weakening of the rule of law and the political capture of all institutions in Serbia distorts the picture of how state money is used and how social support is distributed.

This is most evident in the structure of social expenditures. Pensions consume about 9.8% of GDP, which is the dominant part of the entire social spending, while only 5%, not of GDP but only of social expenditures, goes to programs that directly target poverty. A system nominally dedicated to social protection directs most of its resources towards pensioners, a group whose votes in elections must not be lost, while the most vulnerable get the rest.

A family of three, jobless parents with one child, will receive only 22,565 dinars per month in cash social assistance from April 2026, far below the minimum consumer basket, which for January 2026 is 56,019.81 dinars (average is 108,707.66). In 2023, the World Bank estimates that more than half of the population of Serbia in the poorest fifth do not receive any benefits. Therefore, the system essentially does not work.

Digitization was introduced as an argument to make the government appear reformist. The social map was presented as modernization, but the results showed the opposite. By the end of 2024, almost 60,000 people lost their status as beneficiaries of social assistance, without a corresponding reduction in the poverty rate, by simple administrative deletion from the list (before March 2022, 211,266, August 2023, 176,580 – source Ministry of Labor). At the same time, more than 656 million dinars were invested in the social card from 2022 to August 2024, while the nominal amount of cash social assistance increased by four euros in that period.

The technology was more expensive than the very aid it was supposed to advance, which speaks to whose priorities were actually built into the system. The automation of an inadequate system without first solving structural discriminations does not solve these problems but reinforces them, because the system disproportionately affected Roma, people with disabilities and other marginalized groups. The efficiency sought was that of administrative exclusion of beneficiaries, not assistance.

Let’s not forget pensioners with minimum pensions, because they are the electorate to whom the incompetent addresses. According to the PIO Fund bulletin for April 2026, the total number of pension beneficiaries is 1,663,850. The average pension is 56,848 dinars, the median pension, 47-48,000 dinars, is received by more than half of pensioners. 58% of pensioners receive less than the average pension, and 12.68% (211,027 pensioners) receive less than the legal minimum, which is now 31,092 dinars (employed/self-employed) and 24,443 dinars (farmers). The target electorate is, therefore, at least 800,000 pensioners, if not a whole million, and many of them listen closely to the announcements and hope for some crumbs from the table of the ruling machinery.

According to the 2025 IMF report, Serbia ranks below most countries of similar development in all six categories of the World Bank for measuring the quality of governance, especially in the area of ​​corruption control and the rule of law, and the perception of corruption has significantly worsened in the last 10 years (IMF Country Report, 2025). An institution that answers to the ruling party, and not to citizens, will not implement social protection in the interests of the poor, regardless of how much money flows through it.
Rampant corruption in the social sphere is the core of the problem.

The latest corruption perception index is the lowest since 2012, and with its 116th place, Serbia is ranked better in Europe than only Russia, Ukraine and Turkey. CRTA’s research showed that within the system of centers for social work there are clientelistic networks in which local mayors play a key role. While only about 170,000 citizens (that is, over 70,000 families) receive financial social assistance, more than 700,000 citizens use the services of these centers for social work, and it is these citizens who come under political pressure in order for the government to secure their votes.

A user who depends on a monthly fee that barely covers basic needs will find it difficult to vote against those who grant the fee, and it will be even more difficult to organize and publicly demand its increase. In the parliamentary elections in December 2023, the OSCE noted the buying of votes, violation of the secrecy of voting and pressure on socially vulnerable citizens to support the ruling party. A poor man who receives insufficient assistance from the state is less dangerous to the government than a poor man who receives nothing and has nothing to lose. It’s not a bug in the system. It’s a system.

The most often heard counterargument is that Serbia is progressing: the poverty rate is falling, the economy is growing, the country has received an investment credit rating for the first time. However, according to the data of the Republic Institute of Statistics in 2025, the poverty risk rate was 19.6%, which is a slight decrease compared to the previous year (19.7%) and the year before last (19.9%). The poverty risk rate for pensioners is 23.4%, and for persons over 65 years old, who live alone, as much as 25.8%.

It can be very clearly concluded that the further decline is slowing down because those who remain in poverty are mostly chronically unemployed or infirm. Those who could have easily gotten out of poverty have already gotten out. The rest are those who are structurally excluded by the system: the chronically unemployed, the Roma, the elderly who live alone, single-parent families. Those groups have no organized political power, no lobbies, no media that speak on their behalf. And that is precisely why they remain poor.

Possible solutions

Solutions exist and are not unknown. The problem is solely the political will to implement them, because each of them impinges on the interests of those currently in power.
The most concrete measure is the redirection of social expenditures towards all the most vulnerable and an increase in the amount of assistance. The user targeting mechanism is partially working.

According to data from the World Bank, almost 90% of child benefit expenditures already reach the poorest fifth, but are underfunded. Expansion includes, but above all, increasing the amount of those programs would be the fastest way for the money to reach those who need it. However, this is not done in practice, as it would lead to a reduction of the user’s dependence on the mercy of the local government.

The second direction concerns tax policy. The Fiscal Council has been warning for years that the tax system burdens those who receive the minimum wage more than those who earn several times more. The introduction of a progressive tax on the income of citizens is not a left-wing idea, but a recommendation resulting from an analysis of the efficiency of the redistribution system. I, as a pragmatic leftist, can perhaps be accused of politicking, but not the independent body that very successfully defends its credibility, the Fiscal Council.

According to their opinion in the 2021 “Opportunities and Needs for Systemic Reform” analysis, such a reform could reduce the relative poverty rate by about one percentage point, which is the equivalent of several thousand people. The resistance to the proposed measure of the Fiscal Council is not economic, but political, and if you will, class.

The third is the proper use of institutional capacities. The development of the register of social protection beneficiaries must start from the logic of identifying those who need help, and not from the logic of unfair administrative exclusion. The social card in Serbia went the other way and we have seen the result. Changing that logic does not require a new law or a new system, but requires the government, which would lose its instrument of control if the system really worked.

All three measures have one common assumption: a government that has no interest in using poverty as a political tool is needed. The current government has that interest, and it is twofold. Public resources that should go to the most vulnerable are systematically redirected through corruption, clientelism and non-transparent flows to those who are politically and economically close to the ruling party.

Corruption budget looting on an epic scale is a mechanism of criminal government that keeps money where it should be. And the poverty that remains is not a side effect of that robbery, but a functional part of it. A citizen barely surviving on insufficient government assistance becomes a manageable voter rather than a demanding citizen. What he could or should have is taken from him, and in return he gets just enough not to protest. Poverty in Serbia is not a problem that this corrupt government does not know how to solve, but rather a condition that it has been actively reproducing and perfecting for years, because a poor and dependent citizen suits it better than a free one.

The author is a retired economist with a degree and a councilor of the Green-Left Front in the Assembly of the City Municipality of Čukarica.

The views of the authors in the Dialog column do not necessarily reflect the editorial policy of Danas.