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The Government of the Republic of Serbia

In the service of citizens

Local governments to manage their own property

Belgrade, 26 May 2005

Serbian Minister of Finance Mladjan Dinkic said today that the government will speed up the transfer of property management to local governments and enable them to borrow money on the financial markets. He also promised that subsidies to underdeveloped municipalities in 2006 will be higher.

Author: Beta

Speaking at the conference on sustainable development of local governance, held under the Standing Conference of Towns and Municipalities, Dinkic said that the European Investment Bank (EIB) will approve a total of €25 million in loans for the modernisation of local infrastructure in Serbia.

He explained that the loans will be approved for specific purposes such as the expansion of streets, construction of plumbing systems, introduction of district heating systems, and streetlights.

Dinkic said that the EIB’s loans will have a repayment period of 15 years, with a grace period of between five and seven years and an annual interest of six percent.

According to him, the government has already provided guarantees for these loans and the funds will be distributed through domestic banks, so that the local governments will have a total of around €45 million.

Noting that the Standing Conference has been successful in the past few years, Dinkic said that the government, with the support of the Council of Europe, will transfer the management of local property to local governments and allow them to borrow on the financial markets on their own, offering property as collateral.

Dinkic also announced that a bill on public debt will be passed in June, which will allow local governments to borrow at their own will, but on the condition that an annual instalment does not exceed 15 percent of the previous year’s budget.

He said that the third new thing prepared by the Serbian government is a system of budget fund transferral to local self-government, which will be included into the budget plan for 2006. He explained that according to this, underdeveloped municipalities will receive more funds.

Dinkic suggested that if local self-government wishes to attract foreign investors it should fulfil all conditions for establishing free trade zones and mentioned the Tigar Company from Pirot, which became the second largest exporter in Serbia after doing so.

He assessed that it is more profitable for local self-government to offer free building sites to investors, with an existing infrastructure and permits, rather than to demand high sums for various permits and infrastructure.

The Minister reminded that free construction sites were offered by the Cicevac and Kovin municipalities, and as a result Japanese investors have already shown interest in Kovin.

Dinkic announced that the Serbian government will adopt next week a programme for quicker regional development of Bor, Vranje and Kragujevac, which will include special loan conditions for those who open factories, as the government now sets aside the most subsidies for those regions.

At a Conference on Sustainable Development of Local Self-Government today, Serbian Minister of International Economic Relations Milan Parivodic suggested shortening the procedure for issuing permits to investors to one week, and proposed that municipalities should give free construction sites to investors.

“Our message to the world is that documents in Serbia can be issued in a week! This should be our catchphrase: ‘Serbia-One Week’”, Minister Parivodic said.

“If we desire accelerated growth, we need to secure construction sites to investors with road access, accompanying infrastructure – water, power, sewers, phones and organised land registries”, Parivodic said and concluded that the state and municipal administrations, public utility companies and all competent courts in Serbia must be more efficient.