Panic in the Cities

In October, rent, public utility services and public transport prices have gone up which, coupled with the constant price increases of electricity, coal and timber, and during the last couple of days with the high rise in gasoline prices - has spread panic amongst the urban families of Serbia, since the average salary since December of last year until the end of August of this year - has realistically gone down about 21.7 percent, while price increases range between 40 and 500 percent (which shall, when calculated, drastically further reduce the realistic level of earnings).

The municipal government in Belgrade has reached a decision to increase the prices of basic public utility services in average by 60 percent, and city and suburban transport by 40 percent. According to the presented estimate, these measures should, from the pockets of Belgrade citizens, monthly extract a further 65 million Dinars, which should allegedly cover only a third (primarily) of increased heating fuel expenses. This Belgrade initiative has set in motion all city assemblies in the Republic to increase their prices for public utility services, so that, in that avalanche, news from Smederevo seems both unreal and unbelievable stating that as of October 1 the prices of heating have been reduced by 28.5 percent, the price of water by 26 percent and garbage disposal prices have gone down by as much as 50 percent. Still, even this reduced central heating price in that city is higher than in Belgrade and Novi Sad. If we leave aside this unbelievable incident of price reductions in Smederevo, a city which houses a forge, and whose debt of over one million US Dollars is chronically serviced by all of Serbia, we might state that the situation in all other cities is much more difficult than in Belgrade.

Simultaneously with the drastic price increase of public utilities, the previously approved "electric shock" has been activated upon house budgets, although the 50 percent increase for winter rates has not been employed. As a reminder, by the Decision of the Board of Directors of the Electrical Industry of Serbia, which became effective as of October 1, a so-called "block rate" has been introduced until March of next year, which will primarily destroy those who do not have city central heating. This unpleasant price list does not threaten only those who had, owing to a previous low electricity price system, been "lured" into installing electricity heating devices, but also most of the households who are connected to the city heating plants, since heating by city systems has for the last few years been so insufficient that they had been forced into using additional electric heaters. We should bear in mind that every electricity consumer with every bill pays an additional tax for state owned television of 8.68 Dinars, a certain "compensation" of 8.87 Dinars, and in October is also to pay the last installment for power station repairs of 10.90 Dinars.

With this price-list, those who are supposed to be forced into ceasing to use electricity for heating shall not get a better deal with other fuels since prices for coal have gone up by 50 percent, so that a ton already varies between 160 and 225 Dinars, depending on its quality. Naturally, in the final effect lumber is even more expensive. Gas mainly can not be obtained for a full day's heating, and it's price is even higher than that of solid fuels.

HOW TO SURVIVE: If we are to add to this whole list a sudden rise in the black market price of gasoline of 100 percent, we should not hesitate to use the attribute - catastrophic in assessing the October blow on house budgets. Even though the average August wage of 248 Dinars has been increased by around 5 percent in September, if the economy has managed to maintain the nominal growth rate of previous months (which is extremely improbable, owing to more and more insolvency cases), it is simple to calculate that for half the population it shall not "manage" to cover basic life costs in a city (disregarding food) even taking into account the circumstance that the average salary in the city is somewhat higher than the country's average. Even further, our eminent economy expert Jovan Rankovic estimates that lately in many industrial corporations worker's wages have even nominally dropped and as of now do not exceed 200 Dinars per month, due to a wave of recession which was the price for slowing down inflation.

The problem being, from a macroeconomics standpoint, that it is difficult to qualify this whole wave of price increases as "unjustifiable", owing to the pathetic state of the quality of public services as well as everything else that citizens buy from public enterprises. The unrealistic prices of public utilities have provoked the public enterprises huge losses. Huge quasi-budget deficits were hidden in these losses. That circumstance has enabled Marjanovic's government to boast wildly of its stable finances, and now, when steps have been made towards a real "stabilization", the real state of affairs has surfaced.

The political parties have, naturally, hastened to disassociate themselves from these price increases, literally all of them, including the ruling party, whose members are now carrying out the price increase policy in municipalities and other government bodies. For example, following the Radical Party's announcement in Novi Sad, the Municipal Committee of the Socialist Party of Serbia (SPS) has condemned the price increase in public utility services. Similar voices can be heard from all political organizations, along with the usual routine announcements. Of course, that shall in no way stop the panic in the cities, and amongst people who are simply asking - how to survive?