IMF: Price of energy carriers must increase
The price of natural gas and electricity in Serbia may increase further as early as in May, in line with a request from the International Monetary Fund (IMF) to Serbia's government. However, electricity will still remain one of the cheapest in the Balkan country, the energy minister says.
IMF spells out advice for government
Electricity and gas prices must not remain at such a low level, the head of the IMF’s Serbia mission told the Kopaonik Business Forum. Donal McGettigan stressed that the IMF expects Belgrade to increase energy prices and implement a restructuring programme in the energy sector. As V4NA has already highlighted in an earlier article, Serbia needs to increase the price of electricity and gas as part of its agreement with the International Monetary Fund.
Photo: V4NA
Mr McGettigan recalled that Serbia was one of the first countries to help the most vulnerable groups through low energy prices, but pointed out that time has come for changes in the energy sector.
„These changes, in addition to the increase in energy product prices, will also mean changes in the state-owned energy companies, primarily Elektroprivreda Srbije (EPS), which should be transformed into a joint stock company and receive a new management,”
the chief of the IMF’s Serbia mission said.
According to Donal McGettigan, the Serb electricity provider’s current bad position is due to poor management. Serbia needs an increase in the independence of state-owned companies, stricter monetary policy measures, further work on lowering inflation and additional interest rate hikes, the IMF chief said, detailing the fund’s expectations towards the Belgrade government at the forum.
These statements came as no surprise to Serbia’s general public and politicians. As V4NA reported in a previous article, last December the IMF approved a so-called Stand-By Arrangement of 2.4 billion euros for Serbia. The country plans to use a part of the loan to manage the current energy crisis, while the remainder is intended to serve as a precautionary measure, Serbia’s finance minister explained. The agreement with the International Monetary Fund means stability, support and security for the state, Sinisa Mali said, adding that the deal is a guarantee that structural reforms will continue, especially in the energy sector.
Price of natural gas will rise, energy companies admit
It did not take long for Serbia’s state-owned energy companies to react. Dusan Bajatovic, the director of the Serbian Gas Works, has already announced that the price of natural gas will definitely be increased once this year, and a second increase is also on the table. The price hikes will affect everyone without exception, including the general public and industrial users, N1 writes. The increase is necessary because the Gas Works sells gas to domestic buyers at a much lower price than the company purchases it itself, Mr Bajatovic says. This, however, is not the only cause. In exchange for the stand-by loan granted to Serbia, the IMF has asked for at least three increases in the price of gas and electricity during the next time period, following the January increase, 021.rs points out. The increases will reportedly take place on 1 May, 1 November and 1 May 2024.
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The minister is satisfied
Serbia’s energy supply is stable, Energy Minister Dubravka Dedovic told the Kopaonik Business Forum, stressing that it will also remain stable in the future. In the longer term, the country should aim to ensure that companies in the energy sector operate efficiently and profitably, he opined. Despite the 8-percent increase in January, Serbia still boasts one of the cheapest electricity prices in the region and in Europe and the same is true for residential gas prices, Mr Dedovic emphasized.