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Current collapse will reduce profit: In the first half of 2021, the income of public companies will be 14.7 billion dinars - Serbia Business

Current collapse will reduce profit: In the first half of 2021, the income of public companies will be 14.7 billion dinars

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How public companies operated last year will be known in a few months, when the financial reports are completed and submitted. The last section reveals their results in the first half of 2021. State-owned companies, which perform activities of public importance, made a profit of 14.7 billion dinars in the first six months. The amount is overestimated for the depreciation costs of “Roads of Serbia”, because they are booked only at the end of the year.

In the “Program of economic reforms from 2022 to 2024”, the Government of Serbia notes that 22 companies made a profit in this period. They are in the “plus” of 18.5 billion dinars. That is more than the planned 10.1 billion dinars.

– The greatest influence on the positive net result in the observed period has “Elektroprivreda Srbije”, which made a net profit of 11.2 billion – it is stated in this document.

It is true that these are the results of business until the end of June. They did not include the financial effect of the winter collapse of this company.

– In order to reduce the fiscal risks related to the operations of public companies, the processes of restructuring the largest public companies are underway – it is noted in the “Reform Program”. – It is a group of companies that deal with railway traffic – “Serbian Railways”, “Serbian Railway Infrastructure”, “Serbia Train” and “Serbia Cargo”, as well as in EPS and “Srbijagas”.

The entire process is being carried out in cooperation with the world’s leading financial institutions – the IMF, the World Bank and the European Bank for Reconstruction and Development, in order to put these companies on a sound footing and start operating on a market basis, and reduce potential fiscal costs their business. In addition, the process of implementation of the Action Plan for the implementation of the Strategy of State Ownership and Management of Business Entities Owned by the Republic of Serbia has begun, which, among other things, envisages comprehensive corporatization of public enterprises.

Last year, 2020, public companies ended with a profit of 15.2 billion dinars. Their legal obligation is to pay at least half of their profits into the Serbian budget. The share of profits and dividends of state-owned capital companies represents a significant part of non-tax revenues.

Fiscal risks

There are several channels through which fiscal risks related to the operations of public companies can materialize – the authorities note – They include state guarantees given for loans to public companies, subsidies, inadequate business planning, traditional management that does not meet the needs of the market. Sustainability, efficiency and profitability of public companies affect budget revenues, ie the amount of profits they pay into the budget. The quality of products and services provided by public companies affects the efficiency and profitability of the private sector and ultimately the level of taxes they pay to the budget.