Serbian PM Says Electricity Price Hike to be Lower Than Agreed With IMF

The electricity price hike that Serbia has agreed with the International Monetary Fund (IMF) will be "twice less than planned", Belgrade-based media reported on Tuesday, quoting Serbian prime minister Aleksandar Vucic.

On Monday, local media quoted Vucic as saying that Serbia expects it may be possible to lower the electricity price hike agreed with the IMF after the country's deficit in the first quarter came in sharply below plan.

Earlier on Tuesday, Vucic said Serbia's budget deficit stood at 21.5 billion dinars ($194.7 million/179.3 million euro) in the first quarter of the year, lower than the planned 55 billion dinars and noted that one of the reasons for the overperformance was an increase in non-tax revenues.

When the efforts to raise public sector salaries and pensions succeed, the increase in electricity tariffs will not be too much of a problem for the citizens, news agency Tanjug reported on Tuesday, quoting Vucic.

Earlier in the day, Vucic said that the government will see what it can do in terms of raising public sector wages and pensions as the country's economy seems to be rebounding on the back of tough fiscal consolidation measures implemented with the backing of the IMF and the World Bank, alongside other supporters.

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.

On Tuesday, Zagreb-based Hypo Alpe-Adria-Bank said in a daily note to investors that the performance of Serbia's budget deficit, coming in lower than expected, owes this outcome to one-off effects, such as dividend payments from state-owned enterprises (SOEs) and lower capital expenditures, and will hardly be sustained throughout the whole year.

"Furthermore, we think that SOEs restructuring and privatization process is going slower than planned and hence, we keep our sceptical view that the sovereign will manage to finalize this process in 2015," Hypo said.

In 2014, Serbia's economy fell into recession for the third time in six years, partially due to the devastating floods that hit the Balkan state in May.

Source: SeeNews