24th October 2023, Skopje – Municipalities of Tetovo, Vinica and Zhelino will, upon their request and with central government support, settle their arrears, thus strengthening their financial capacities. Today, Minister of Finance, Fatmir Besimi and Mayors Bilal Kasami, Mile Petkov and Blerium Sejdoi signed the agreements for structural bonds, Ministry of Finance issues to these three municipalities.
Structural bonds are a new financial instrument, introduced under the Law on Financing the Local Government Units, providing them with opportunity to settle the arrears therewith. They are issued for a 10-year period, which provides for rescheduling the liabilities, as well as consolidating their budgets, thus allowing them to focus on their development. Amount of structural bonds is repaid in 10 annual equal installments.
“These are the first structural bonds Ministry of Finance issued as per the new reform Law on Financing the Local Government Units, thus proving more funds for local authorities, all to the end of maintaining their financial stability and delivering high-quality services. Municipalities of Tetovo, Vinica and Želino were the local governments that took advantage of this one-time opportunity provided under the Law, thereby submitting a request within the legally set deadline for the issuance of a structural bond and thus, providing funds for settlement of liabilities and focusing on their development, Minister Besimi said.
Ministry of Finance issued structural bonds totaling Denar 275 million, Denar 250.2 million out of which is intended for Tetovo, Denar 21.7 million for Zhelino and Denar 2.5 million for Vinica. By signing the Agreements, the municipalities can use the issued bonds to settle their liabilities to the creditors, who can, in turn, use the issued bonds to settle the liabilities to the Public Revenue Office or trade them on the secondary market on the Stock Exchange.
Issuance of structural bonds is part of the foreseen fiscal decentralization reform, being also incorporated in the broad public finance management reform,
as one of the instruments being made available to the municipalities. In other words, for the purpose of strengthening their financial stability, the municipalities may also have at their disposal a stand-by credit from the Ministry of Finance and can issue a municipal bond with the Ministry of Finance as purchaser. Additionally, as per the amendments to the Law on Financing Local Government Units, support is also provided to the municipalities by increased percentage of PIT transferred to the municipalities from 3% to 6%, as well as the increased percentage of VAT grants from 4.5% to 6%.
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