Bankruptcy looms over several Serbian cities

Just as the state budget became somewhat stable and the public debt began to decline, it seems that the threat of the so-called Greek scenario is looming over several Serbian cities.

According to the Fiscal Council, the financial strife that some cities in Serbia have found themselves in is currently the biggest problem for the Serbian public finances and the government should urgently do something about it.

“Kragujevac will go bankrupt soon if it doesn’t implement radical financial consolidation which it won’t be able to do unless the state authorities get involved. This problem should not be resolved by the state pouring money from its budget into Kragujevac’s budget but rather the state should play an IMF-like role and suggest to Kragujevac’s authorities to increase property tax, as one of the measures”, says Pavle Petrovic, President of the Fiscal Council.

“For a decade now, the Ministry of Finance and the Ministry of Economy have been tolerating Kragujevac not paying any of its financial obligations, amassing debt, adopting unrealistic budgets and supporting public utility companies that are spendthrifts”, Petrovic adds.

Kragujevac could be the worst example of badly managed finances, but certainly not the only one. Another ticking time bomb is Belgrade which debt makes 65% of the city’s total annual budget.

Towns and cities in Serbia owe a total of 1.2 billion dinars, more than public enterprises the Electric Power Industry of Serbia (EPS) or Srbijagas, for instance.

Petrovic also says that the resolving the financial problems of the Belgrade Public Transport Company (Gradsko Saobracajno Preduzece – GSP) is a big challenge too. “Belgrade’s budget gets 10 billion dinars annually from the sale of public transport tickets, while the cost of public transport is around 24 billion dinars. The negative difference (of 14 billion dinars) is covered through subsidies from the city budget. Just to give you an idea how big of an amount that is, I am just going to say that Serbian Railways, which receives the biggest state subsidies, gets the same amount of money from the state”, Petrovic adds.

(Politika, 12.10.2017)




This post is also available in: Italiano

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