Municipal bonds in Serbian local goverment finance system

In the last decade, from 2001 to the present, Serbian local government has gone trough a reform process and got specific competencies concerning local infrastructure development, construction of public buildings and delivering various public services. This process was followed with the local finance system reform in which Local Serbian Governments’ financial power has been considerably increased: during the above mentioned period the total funds available to LGs have increased by almost 50%. Newly developed legal framework introduced possibility of borrowing funds, first of all, for financing capital infrastructure projects. According to this framework Serbian LGs are allowed to use municipal bonds to finance their functions. It also defined some general rules for issuing bonds (the types of bonds, its purposes, general procedure of issuing and alike). Anyhow, even if it has been for some degree of readiness both at the local and central government level to use municipal bonds, they have not yet become part of financial practice in Serbia