EPS will receive 85 million EUR subsidy

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The rebalancing proposal foresees that the total deficit will be 279.1 billion dinars, while the budget for this year originally planned a total deficit of 200.2 billion dinars.

Professor Milojko Arsić of the Faculty of Economics in Belgrade tells Biznis.rs that the main reason for the rebalancing is that the state’s expenditures throughout the year were higher than planned, as well as that this situation will certainly remain in the next two months, and that most of of increased expenditures refers to subsidies to companies in the field of energy.

“When it comes to Srbijagas, it can be said that the subsidies are the result of the increase in prices on the world market and the decision that the Government of Serbia will take over part of the increase in those costs by selling gas to consumers and producers at a lower price than the purchase price. In the case of Elektroprivreda Srbije (EPS), the additional expenses are a consequence of the company’s poor management, which results in a large import of electricity, coal and other components throughout this year”, says Arsić.

10 billion dinars (85.2 million euros) in the form of subsidies are planned for the procurement of basic mining machinery for open pit mines of the EPS by rebalancing the budget, with a note that these funds will be used in accordance with a special act of the Government, and 416, 5 million dinars for the construction of the connection of the thermal transmission line to TENT A.

Srbijagas, in the part of the rebalancing related to indirect liabilities and the internal debt of the country, can count on the payment of annual installments on loans with a total value of 200 million euros, which the public company took from six domestic banks with the guarantee of the state. With the rebalancing, it is planned that the state will pay a total of 44.5 million euros in the name of due installments with OTP, Raiffeisen, Intes, Komercijalna, Sberbank and Nova Ljubljanska banka dd Ljubljana.

As far as the energy sector is concerned, Resavica can also count on the subsidy, for which 4.8 billion dinars are planned for the consolidation of operations.

Total subsidies in the rebalancing amount to 174.4 billion dinars, while the original budget planned an amount of 143.6 billion dinars, which means that the rebalancing planned their increase by slightly more than 30 billion dinars, of which 15 billion is intended for agriculture.

Professor Arsić explains that the planned increase in the total budget deficit by 79 billion dinars directly affected the increase in state borrowing.

“The state borrows in order to settle the debts due this year and to cover the deficit. Also, part of the borrowing, such as a loan from the United Arab Emirates (of one billion dollars), probably happened in order to secure funds for obligations that are due at the beginning of next year”, says Milojko Arsić.

According to the rebalancing proposal adopted by the Government of Serbia on Thursday, November 3, the total revenues and receipts of the budget are foreseen in the amount of 1,709.5 billion dinars. Tax revenues planned by the budget rebalancing are 1,490.6 billion dinars, non-tax revenues are 199.7 billion dinars, and expenditures are 1,988.5 billion dinars, the Government announced. For capital investments, 419.2 billion dinars, or 5.9 percent of GDP, were set aside, and at the level of the general government, about 512.7 billion dinars, or 7.2 percent of GDP.

In the rebalancing, the financing plan for the state’s obligations has also been changed, given that it is calculated that the funds needed to finance the budget deficit, the acquisition of financial assets and the repayment of principal on the basis of debts to domestic and foreign lenders for direct and indirect obligations will amount to a total of 817.9 billion dinars, unlike the 624.7 billion dinars planned in the original budget.

“The aforementioned funds will be secured from loans from domestic and international commercial and multilateral financial institutions and foreign governments, as well as from the funds of the International Monetary Fund in the amount of a maximum of 450 billion dinars, through the issuance of notes and bonds on the domestic financial market in the amount of a maximum of 300 billion dinars and, if necessary, from the income generated from the issue of Eurobonds”, the rebalance states, while in the original budget, 139 billion dinars less borrowing from the IMF was planned, as well as 70 billion dinars less in the name of issues of notes and bonds, Biznis writes.

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