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Debts of public enterprises paid by the citizens

Public enterprises continue getting into debt, while the managers are appointed along political party lines and they employ political cadre. The end result is that the debt made by public enterprises is transformed into public dept. This situation is possible because the key positions in public companies are considered party spoils, and there is no adequate control of the work of companies or the management.

According to the investigation by the journalists of Independent Electronic Media Association (ANEM) and Insajder Production, the debt in public enterprises is made mostly due to fixing jobs to privileged private companies.

Namely, the management of public companies makes deals with private companies without public bids thus breaking the Law on public tenders.

Over 700 public companies in Serbia buy equipment, rent mechanization, and carry out work that engages private companies as subcontractors.

Private entrepreneurs are eager to enter into these deals because they know that if public companies do not have the money to pay them, they will be reimbursed by the state or municipalities’ funds.

Representatives of the Fiscal Council, an independent governmental institution that controls how tax payers’ money is spent, warned in several reports that the way public companies spend the state’s money is problematic and that the state must react.

Vladimir Vuckovic from Fiscal Council told Insajder Production that, two years ago, this situation was threatening to ruin public financing of Serbia.

“Citizens are paying the price and the state is doing nothing to fix the public sector,” stated Vuckovic.

While large state public enterprises are under the scrutiny of both the public and relevant institutions, virtually no one controls the operations of smaller enterprises at the local level.

“What the analyses show is that local public enterprises have almost the same problems as those at the state level such as big losses, delays, and overemployment. There is also lack of investments at the local level.

Small, local public enterprises have huge debts that are not dangerous for the state, but for the municipalities they are,” added Vuckovic.

Insajder Production made the series “Insajder locally” in collaboration with local journalists of ANEM about business of public enterprises.

Mirjana Jevtovic

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