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IMF insists that Serbia should help local administrations

International Monetary Fund insists on Serbian Government helping local administrations in solving financial problems. The intervention of IMF came after the report of the Serbian Fiscal Council was published stating that many local municipalities are on the brink of bankrupt.

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According to Politika newspapers, the IMF stated that a step toward solving the financial problems of local governments is supervision by the state. The Government should monitor towns and municipalities and plan their budget correctly and realistically.

The Fiscal Council published a report on Tuesday, revealing problems and risks of public funding on the local level.

Towns, local municipalities, and public companies run by local governments owe around one billion Euros, which is a fiscal risk. In comparison, the total debt of local governments is equal to that of the state owned company Srbijagas, which imports gas for Serbia.

“If the Government does not take necessary measures, the debts of towns and local governments will drain the state funds,” said Pavle Petrovic, President of the Fiscal Council.

According to the analysis of the Fiscal Council, local public companies spend around 200 million Euros per year, while 250 million euros is required for investments in local infrastructure.

“The biggest deficit is made by the city transport of Belgrade, taking around 100 million euros per year from the city budget. Another public company in question is “Energetika” (Energy) in Kragujevac, which owes to everyone and everyone owes to it.The town of Kragujevac is in the worst position and it will go bankrupt if something does not change,” Petrovic said.

Public companies in Serbia have been making debts for years and, at the same time, the heads of the companies have been appointed by the ruling parties.

In the end, when companies get to the brink of bankruptcy, the debt is transformed into a public debt so the citizens pay for bad management.

For a year, the journalists of local media ANEM and Insajder have investigated the mechanism of pumping the money out of the budget.

Our investigation has shown that this situation is possible because the public companies are treated as “party prey” and there is no control or supervision of their management.

Irena Stevic

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