Mali: Electricity price changed 10 times within a year, and ours is still the cheapest in Europe

Deputy PM and Minister of Finance Sinisa Mali presented on Sunday at a session of the Serbian Assembly Committee on Finance the Republic Budget and the Control of Spending of Public Funds, the Proposal of the Law on the Budget for 2023, and pointed out that public finances are stable, despite the crisis and the assistance govem to the economy and citizens.

According to him, this is confirmed by international financial institutions, which say that our economy has proven to be "tough and resilient."

"In conditions when other countries are entering recession, our GDP growth rates are still positive, and this year GDP in absolute terms will exceed 60 billion euros, while 10 years ago it was around 33 billion euros. We achieved this result despite the floods, the consolidation of public finances, the pandemic and the conflict in Ukraine," said Mali, according to the Ministry of Finance.

When it comes to the unemployment rate, it was 8.9 percent in the third quarter.

"As for attracting foreign direct investments, we expect that to exceed 4 billion euros at the end of the year. Today, Serbia is an attractive investment destination. If we talk about the budget, today we have 285 billion dinars in our account, while our public debt is about 54% of GDP," said Mali.

He added that the planned budget for 2023 envisages 7.8% higher revenues compared to the budget rebalancing, and that our expenses are also higher, while the deficit amounts to 3.3% and was agreed on with the IMF.

"The real deficit is 1.9%, and the rest is reserved for energy sources, amounting to 1.4%. This is important to us and we will do everything to have enough gas, electricity, and all energy sources necessary for a normal functioning of the population and the economy," the minister of finance continued.

Budget proposal based on 3 pillars

According to Mali, the crucial points are the following:

1. Preserving the citizens' standard of living

2. Significant spending for capital investments

3. Energy

First pillar

When it comes to preserving the standard of living of citizens, the Minister of Finance recalled that from November 1 pensions were increased by nine percent, and that on December 2 these higher pensions were paid to the "self-employed" category, on December 6 to the military and farmers, and on December 10 this will happen for all other categories of retired citizens.

"Starting January 1, 2023, we will have a new increase in pensions of 12.1 percent, which, together with the nine percent, is the cumulative largest increase, which in percentage terms amounts to 20.8 percent," stated Sinisa Mali, simultaneously announcing salary increase in the public sector of 12.5 percent, as well as a 25 percent salary increase for the military.

Also, from January 1, the minimum wage will be higher by 14.3 percent.

According to Mali, the budget foresees further salary relief, so from January 1, 2023, it is planned to increase the non-taxable part of the gross salary by 12.5 percent, from 19,300 to 21,712 dinars, while at the same time reducing the rate of PIO contribution at the expense of the employer by one percentage point.

"A few years ago, the total wage burden was 64 percent, and now it will be 60 percent. We have taken on the burden of increasing the minimum wage, in order to provide opportunities for new employment, or at least, so that the urrent employment rate does not decrease," said Mali.

Second pillar

When it comes to capital investments, Sinisa Mali said that 6.8 percent of GDP is allocated for capital investments in the budget proposal.

"We now have high investment rates in capital projects. We have not given up on any capital investment. In Serbia, construction continues everywhere, from highways and factories for wastewater treatment plants, and the construction of sewerage networks through the Clean Serbia project, through hospitals, healthcare centers, schools, the Ministry of Public Investments," said the minister.

Third pillar

The minister of finance says that there is a reserved space in the budget for the purchase of gas and electricity, in addition to what we took upon ourselves in the agreement with the IMF, which is active restructuring of companies in the energy sector "in order to fully stabilize the energy sector in the shortest period and in order to make that sector a generator of growth."

The minister also pointed out that the gas storage in Banatski Dvor is full, that we are currently consuming gas from the storage in Hungary, and that we have enough gas for our needs. When it comes to electricity, he said that in September 2021 the price per megawatt-hour was 55 to 60 euros, today it is 300 to 400, and even went up to 500 euros.

Therefore, the price of electricity has changed ten times.

"But in Serbia we still have the cheapest electricity in Europe," said Mali.

He also stressed that the Law on the Budget System contains new fiscal rules, which have been agreed with the IMF, and which relate to salaries, pensions, deficit, public debt, and that the Government is committed to maintaining macroeconomic stability.

(Telegraf Biznis)