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Joint Meeting of the Ministry of Finance and the Union of Municipalities of Montenegro

OLYMPUS DIGITAL CAMERA 31 May 2013 – The Ministry of Finance and the Union of Municipalities of Montenegro meet today in Podgorica to discuss current situation of the local self-government financing. Besides representatives of these institutions, the meeting was attended by Mayors, heads of secretariats for local self-government financing and representatives of state bodies in charge for affairs affected local self-government finances.

The “Analysis of the Status of Local Self-Government Finances”, a document prepared by the Union’s Committee for Local Self-Government Financing, was discussed at the meeting.

After introduction statement of the Vice-President of the Union’s Executive Board, Mr. Aleksandar Žurić, and a short presentation of findings from the Analysis, delivered by Mr. Mitar Matijašević, President of the Committee, Mr. Radoje Žugić, PhD, Minister of Finance, delivered his speech. He stated if we wanted to see a real picture in this sector, we had to consider not only revenues but also expenditures, and total debts and outstanding financial obligations of local self-governments. All of that had to to be urgently resolved.

Minister Žugić expressed the readiness of the Ministry of Finance to co-operate with local self-governments on urgent consolidation of local public finances. Therein, the Minister presented findings from the Information on Municipal Finances Indicators for 2012. The Information was prepared by the Ministry of Finance and it has been recently discussed at a session of the Government of Montenegro. It revealed the aggravation of the local self-governments finances status in the preceding period. Therefore, Minister Žugić emphasized the need to further rationalize the number of employees in local self-governments and to decrease their salaries down to the level of the salaries of state civil servants and employees. The Minister also pointed out at the problems related to non-payment of taxes, inefficient implementation of the Agreements on Financial Restructuring of certain municipalities, and municipal indebtedness.

OLYMPUS DIGITAL CAMERA On the other part, representatives of local self-governments agreed with the proposals from the Analysis prepared by the Committee for Local Self-Government Financing. They stated that the main problem of local self-governments financing was generated due to abolishment of certain revenues that represented a significant proportion of local budgets. In their opinions, it is necessary to find a way to substitute a portion of these revenues and to implement at the same time the conclusions from the Information adopted by the Government.

After the constructive discussion, following conclusions have been made:

  • Each local self-government unit to prepare a consolidation plan of local self-government finances including the measures of internal economy, as soon as possible;
  • To deliver the plan of each local self-government unit to the Ministry of Finance which representatives would be involved in the preparation of proposal of measures for overcoming existing problems;
  • Local self-governments to propose conversion of tax liabilities (into property of local self-governments, etc.), as soon as possible;
  • After a comprehensive analysis of all aspects of local self-governments finances, to prepare an analysis of total fiscal policy which will reflects the effects of so-far implementation of the Law on Local Self-Government Financing and it will show if the amending of the Law is well-founded.

All attendants expressed the expectation that the implementation of the conclusions would improve the status of this most important sector for local self-governments functioning.