Publication: Serbia : Decentralization and Local Service Delivery
Date
2008-03
ISSN
Published
2008-03
Author(s)
World Bank
Abstract
Serbia's ability to achieve
macroeconomic stabilization and restructure its public
finances has been, and will continue to be, impacted by the
policy actions of its sub-national governments. For the
purposes of this paper, these include the province of
Vojvodina and municipal governments. In many countries, the
fiscal performance of sub-national governments has created
problems for macroeconomic management through the running of
deficits, accumulation of arrears, or the incurring of debts
which must eventually be covered by the central government.
This chapter examines the experience to date and the
institutional mechanisms for macroeconomic management at the
sub-national level in Serbia. The next section of this
chapter reviews the fiscal performance of Serbian
sub-national governments, especially in relation to the
Republican government's ongoing efforts to restructure
the public sector. A key finding is that the composition of
public expenditures evolved quite differently at the
Republican and sub-national levels, especially during the
successful fiscal consolidation of 2003-2005, when control
of spending on wages and salaries and on enterprise
subsidies at the central level was not matched at the
sub-national level. The increase in subsidies to municipal
enterprises, combined with the growing arrears of such
firms, points to a need to focus on their restructuring and
governance. The third section reviews the institutional
framework for macroeconomic management in the sub-national
governments. Since 2002, a number of important laws have
strengthened the framework for regulating the finances and
borrowing of sub-national governments. The capacity of the
Ministry of Finance to monitor and report on fiscal outcomes
has also improved significantly. As a result, over the last
several years, sub-national governments have broadly adhered
to their spending and debt limits. However, further delays
in the restructuring of municipal enterprises, coupled with
the likely emergence or growth of new financing sources for
sub-national governments (including borrowing and the
proceeds from privatization and other asset sales), could
create additional spending pressure and lead to larger
deficits at the sub-national level. The fourth and final
section summarizes the main conclusions of this chapter.
Citation
“World Bank. 2008. Serbia : Decentralization and Local Service Delivery. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/90969024-8bdd-5475-88a1-75d36fa136e5 License: CC BY 3.0 IGO.”