Public enterprise reform "not going as planned"

Fiscal trends in Serbia in the first four months of the year were "satisfactory - but delays in public finance reform were worrisome."

Izvor: Beta

Friday, 13.05.2016.

12:14

Public enterprise reform "not going as planned"

The report stressed that power utility Elektroprivreda Srbije (EPS) had not yet adopted changes to the collective bargaining agreement which would enable the laying off of redundant workers and which, according to the plan, should have been finalized by the end of 2015, and noted that the announced electricity price hike had been delayed and that the latest statistical data showed that salaries in the power utility were not under control.

The council further said that the rightsizing of state railway company Zeleznice Srbije had stalled, while reforms in state gas outfit Srbijagas had seen the least progress, as "not even a relatively painless unbundling in line with Energy Community demands has been completed."

"Further delays in reforms in major public enterprises and possible shifting of their huge debt to the state would certainly annul all the efforts so far toward public finance recovery," the council said.

Other important reforms were also running behind schedule "the planned rightsizing at the general administration level has hardly begun, while the biggest companies slated for privatization will certainly remain under state ownership even after the expiration of the state's protection from debt enforcement," the council said.

"For (copper mine) RTB Bor, there are studies showing that this company could be profitable following rightsizing, appointment of a professional management and securing of additional working capital, but there have been no concrete steps forward. As regards (underground coal miner PEU) Resavica, there is no clear plan in place, while solutions have not been found for several other companies which stood a relatively good chance to be privatized, such as (agribusiness) PKB and (pharmaceutical company) Galenika," according to the report.

The council further said that if the state continued to directly or indirectly assist these companies, it would cost the state budget EUR 200 million on an annual basis.