Serbia's arrangement with the IMF includes an increase in the price of electricity

(Patria) - The stand-by arrangement with the International Monetary Fund (IMF), approved by the institution's Board of Directors for Serbia, announces that the Serbian government will immediately use one billion euros out of the approved 2.4 billion euros, and that electricity and gas price increases will follow.

The remaining funds will be available to Serbia after semi-annual reviews. The state intends to withdraw the funds in two tranches in 2023, while the remainder, intended for 2024, will serve as precautionary funds, reports Beta.

The most important part of the program relates to energy. According to the PCI arrangement, Elektroprivreda Srbije (EPS) was supposed to become a joint-stock company by the end of November, but in the new arrangement, the deadline for changing its status has been moved to the end of February. As stated in the statement from the Fund for Macroeconomic Stability, the most important things are enabling EPS and Srbijagas to cover their costs and stabilizing electricity production. It is stated that steps should be taken towards a sustainable energy future, "while simultaneously opening up the possibility for private capital participation".

It is stated that it is important to implement reforms in the management of EPS and Srbijagas, and that a law regulating the management of state-owned enterprises should be passed by the end of the year. According to this law, the management and supervision of state-owned enterprises will be centralized in the Ministry of Economy, although this does not apply to energy companies. The Fund expects EPS to reach a point where it covers its operating costs in 2023, while Srbijagas will achieve this by the end of the program, which is the end of 2024.

This will be achieved in large part thanks to the increase in electricity and gas prices. Following the 6.5 percent increase in electricity prices in September and the increase in the fee for RES and a 27 percent increase for businesses, an additional combined increase of 15 percent should be sufficient, according to the Fund's assessment, for EPS to cover the costs of electricity production and procurement.

"This will be achieved through an increase of eight percent in January and eight percent in May. Further price increases will be applied to maintain cost coverage," the IMF statement said.