The decision of the National Energy Regulatory Authority (ANRE) to increase electricity tariffs, scheduled for January 3, could have profound effects on the economy and the population. Suppliers have called for a 2.2-fold increase in tariffs, which would lead to a substantial rise in consumer spending on electricity, IPN reports.
Economic expert Veaceslav Ionita explains that this increase will double the total amount spent by the population on electricity annually, from 4.4 billion lei to about 9 billion lei.
"The population spends 1 billion lei per quarter on electricity, which is less than 2.5% of the family budget. A doubling of the price would mean maximum 2.5% inflation on top of what we have now. Today inflation has reached 7% annually and could go up to 10%," Veaceslav Ionita told IPN.
This rise in inflation comes against a difficult economic backdrop. In 2022, inflation hit a record high of 34.6%, and cumulative inflation has reached 70% in the last four years, eroding citizens' purchasing power. Increasing electricity tariffs would amplify this trend, disproportionately affecting the most vulnerable social groups, such as pensioners, civil servants and low-income earners. "Pensioners and civil servants, already hit by below-inflation wage increases, will feel this burden most acutely. Vulnerable people, who allocate a significant part of their income to utilities, will be the most exposed", emphasized expert Veaceslav Ionita.
Besides the economic impact, a wave of social unrest is expected. "If solutions are not found to cushion the impact of these increases, Moldova's population will face a new wave of energy poverty. Higher bills will burden households and generate massive discontent, especially among the most vulnerable," warns the economist.
Veaceslav Ionita concluded that this complex situation calls for rapid and effective action by the authorities to protect the population from the effects of a possible energy and economic crisis.
