Next year more money to local self-governments from the budget

Serbian Minister of Finance Mladjan Dinkic said today that the capital surplus in Serbia’s balance of payment this year will be between $8 and $9 billion, which will create a material base for greater transfers to local self-governments. Opening a public discussion “State transfers to local authorities”, Dinkic said that owing to this year’s inflows into the budget of 20% of GDP, the state is able to transfer a considerable part of funds and responsibilities to local self-governments.

The Minister specified that a transfer almost two times higher than this year’s is planned for next year, and specified that that transfer will be 27.9 billion dinars, as opposed to 15.4 billion dinars in 2006. He recommended the local authorities to use these funds for investing into projects of local significance for which they did not have money before, as well as on investments for boosting local administrations’ capacities. He explained that after the adoption of the new Constitution of Serbia, conditions have been created for the property to be put at disposal of local self-governments.

Dinkic recalled that on January 1, 2007, the Law on financing the local self-government comes into force and added that it is also necessary to pass a law on the property of the local self-government, with which the fiscal decentralisation would be completed. According to him, these laws will improve the transparency of the local self-government, in which process the property tax will be the original income of cities and municipalities.

The public debate “State transfers to local authorities” is being held as part of a joint programme of the European Agency for Reconstruction and the Council of Europe called “Strengthening local self-government in Serbia”, with the aim of giving support to the Serbian government and the Permanent conference of the cities and municipalities for the development of effective governance at local level. The programme is worth €1.8 million and will be completed by 2008.