Serbia expects it may be possible to lower the electricity price hike agreed with the International Monetary Fund (IMF) after the country's deficit in the first quarter came in sharply below plan, local media reported on Monday, quoting Serbian prime minister Aleksandar Vucic.

Serbian state-owned power utility EPS is set to request an increase in the regulated electricity price for end consumers that, in combination with a planned excise tax, would result in a total price increase of 15% as of April 1, a memorandum of economic and financial policy submitted by the government in Belgrade to the IMF indicated in February.

The document outlines the economic policies that the Serbian government and the country's central bank intend to implement under a 1.2 billion euro ($1.32 billion) three-year standby arrangement with the IMF.

Additional adjustments in the regulated electricity price will follow in April 2016 if necessary, the document indicated while noting that the planned excise tax on electricity aims to reduce inefficiency of consumption.

Serbia's deficit in the first quarter amounted to 21.5 billion dinars ($197 million/179 million euro), below the 55 billion dinar target agreed with the IMF, newspaper Politika reported, quoting Vucic.

Serbia’s consolidated budget deficit rose to 187.5 billion dinars in 2014 from 178.7 billion dinars a year earlier.

In 2014, Serbia's economy fell into recession for the third time in six years, partially due to the devastating floods in May. The government expects real gross domestic product to contract by 0.5% in 2015 due to sizeable fiscal consolidation.

Source: SeeNews