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Serbia promises IMF electricity tariff reform by August
🇷🇸 Serbia /Economy & Trade

Serbia promises IMF electricity tariff reform by August

From N1 Serbia · () Serbian

Translated from Serbian, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • Serbia's government has pledged to the International Monetary Fund (IMF) to reform its electricity tariff system by August.
  • The current system uses tiered "block tariffs" with higher prices for consumption exceeding certain limits, aiming to encourage energy saving.
  • The IMF advocates for electricity prices that reflect actual production and distribution costs, with targeted social assistance for vulnerable households.

The Serbian government has committed to the International Monetary Fund (IMF) to revise its electricity pricing system for households by the end of August. This commitment follows previous adjustments to the block tariff system, which previously lowered the threshold for higher-priced electricity from 1,600 to 1,200 kilowatt-hours per month.

We plan to revise the current structure of block tariffs and define options for reform by the end of August 2026.

— Serbian government representativesA pledge made by Serbian government representatives to the IMF regarding electricity tariff reform.

Currently, Serbia's electricity consumption is divided into three tiers. The "green zone" covers rational, low consumption up to 350 kWh per month at the lowest rates. The "blue zone" applies to moderate consumption between 351 and 1,200 kWh. The "red zone" signifies high consumption above 1,200 kWh, where electricity is charged at double the rate of the blue zone. Changes to these consumption limits directly impact citizens' electricity bills.

The IMF has emphasized the importance of this system's stability, citing increased risks to energy security and high global energy prices. The fund argues that the billing method must adapt to current realities for the energy system to remain viable. The IMF's approach consistently pushes for electricity prices that align with the actual costs of production and distribution, viewing this as essential for the financial sustainability of the entire energy sector.

The stability of this system is a key issue because risks to energy security are elevated and energy commodity prices are high on the global market, which is why the calculation method must be adapted to reality for the energy system to survive at all.

— IMF reportAn excerpt from an IMF report explaining the rationale behind the push for electricity tariff reform.

According to the IMF's reports, the state should not artificially suppress prices for all consumers. Instead, market-driven prices should incentivize energy conservation. The fund suggests that social support should be directly targeted at families in need, rather than subsidizing high consumption for those who can afford it through generally low electricity rates.

The continuation of progress towards electricity tariffs that cover costs is the only way to ensure the financial sustainability and stability of the entire system.

— IMF reportThe IMF's assessment on the necessity of cost-covering electricity tariffs.

Serbia's government has indicated it will propose reforms to the current block tariff system by the end of August. While maintaining lower prices below a set consumption threshold, the government also noted that the total cost of its program to support energy-vulnerable customers amounts to 3.3 billion dinars. They are open to further expanding this support program using fiscal resources if energy prices take an unfavorable turn.

We will continue to use block tariffs that offer lower electricity prices below the established consumption threshold.

— Serbian government representativesSerbian officials assuring the IMF about the continued use of tiered pricing for lower consumption levels.
DistantNews Editorial

Originally published by N1 Serbia in Serbian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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