The municipality of Tivat is still waiting for the green light to borrow

The Ministry of Finance states that the request for long-term borrowing of Tivat was submitted on March 9, 2021, so there was no possibility to process it.

Tivat Municipality Building, Photo: Tivat Municipality

The municipality of Tivat has been waiting for almost three months from the authorities in the Government to obtain formal approval for a new long-term loan that is necessary for the local government to get out of the problems left to it by the previous DPS-SD-HGI government.

The municipality claims that they submitted a request to the Ministry of Finance and Social Welfare in January to approve a long-term loan of three million euros from CKB Bank, but that they have not yet received a final answer.

In the meantime, the Ministry of Finance, which is responsible for local self-governments, has repeatedly asked the Municipality of Tivat to complete its request with various amendments and consents from other ministries.

According to them, the request of the local administration of Tivat was completed recently and a decision-making procedure will follow.

“The Ministry of Finance and Social Welfare is analyzing the submitted request of the Municipality of Tivat, and after that, a further procedure defined by law will be determined, ie implemented, in cooperation with the Municipality of Tivat.” The request for long-term borrowing of the Municipality, dated March 8, 2021, was submitted to the Ministry on March 9, 2021, so there was no possibility to process and implement the necessary procedure for which the Ministry is in charge, “they told” Vijesti “from the department. led by Minister Milojko Spajic.

They noted that Article 57 of the Law on Budget and Fiscal Responsibility defines that “Municipalities may take long-term loans and provide guarantees with the prior consent of the Government, which is given at the proposal of the Ministry of Finance.”

“The mentioned provision clearly indicates that the Ministry does not give its consent to the debts of the municipalities, but the Government does so, at the proposal of the Ministry.” We remind you that the Municipality must meet the conditions defined in Article 49 of the Law on Financing of Local Self-Government Units, which reads: “The Municipality may borrow so that the total repayment of principal and interest on an annual basis, payments under leasing agreements and other obligations may exceed 10 percent of the generated current revenues in the year preceding the year of borrowing, with the prior consent of the Government. The municipality may borrow above the levels referred to in paragraph 1 of this Article only for financing capital expenditures of strategic importance for the municipality, ie the state, with the prior consent of the Government “, said the Ministry of Finance.

They also state that the Ministry would consider the fulfillment of conditions for credit indebtedness of local government, “The municipality is obliged to submit, along with the request, the accompanying documentation defined by the Instruction on the content of requests for long-term borrowing of municipalities, companies, institutions and other legal entities founded by municipalities.” .

“After receiving the documentation, if the conditions prescribed by law are met, the Ministry sends a proposal to the Government for giving consent to the requested credit indebtedness. The Ministry has professional and good cooperation with the municipalities, including the Municipality of Tivat. The representatives of the Ministry had two meetings with the representatives of the Municipality during this year, at which a solution was sought in a constructive way, and which would be within the legal framework “, they told” Vijesti “from the department of Minister Spajić.

On the other hand, the local administration of Tivat unofficially expresses great dissatisfaction with the way the Ministry has acted so far. They suspect that their request for approval for long-term credit indebtedness, as they said, “is intentionally obstructed by DPS staff who remained in their positions in that ministry.”

The administration of the mayor of Tivat, Zeljko Komnenovic (NP), prepared, and the local parliament, at its session on December 29 last year, adopted the Decision on long-term borrowing of the Municipality, according to which the local government would take a loan of three million euros. The current local government of Tivat, the civic lists NP, BF and GB, which took over the management of the city from the DPS-SD-HGI coalition after the elections on August 30, said earlier that it found the situation in city finances far worse than before. praised by former Tivat DPS leaders led by former mayor Siniša Kusovac and former mayor Ivan Novosel.

As it turned out, after Komnenović took office on October 16, the municipality is not liquid at all, as claimed by Kusovac and Novosel, and has over 3.5 million overdue and unpaid liabilities, of which as much as 1.25 million were only in unpaid invoices for various goods and services that the new government found in the drawers of the Secretariat for Finance, which until then was managed by Rajka Jovićević (DPS). The municipality also has multimillion-dollar incoming obligations for the payment of usurped private land taken from the citizens by the former DPS-SD-HGI government, ie for the return of previously taken loans to the German bank KfW for the construction of sewerage and water infrastructure.

Therefore, the Municipality of Tivat made a decision on a long-term loan in the amount of three million euros, and the best offer for that was received by the city administration from CKB Bank. If the Government finally gives it the green light, the Municipality will take a loan from that bank with the purpose of realizing capital investments, with a repayment period of six years, with a grace period of one year. The interest rate is 2.75 percent plus six-month Euribor, and the loan approval fee, which is paid once, is 0.10 percent of the approved loan amount.

“Long-term credit indebtedness is necessary in order to ensure financial stability and realization of capital expenditures: realized, but unpaid capital obligations transferred from 2020; liabilities on the basis of credit indebtedness to KfW bank transferred from 2020; obligations based on actual expropriation by judgments; agreed, but unrealized obligation for the MR2 road “, it is stated in the explanation that was then submitted to the councilors.

To date, the required consent for borrowing has not been obtained, so the leaders of Tivat have more and more problems to control the anger of those to whom the Municipality owes money for a long time, primarily for the payment of fees for usurped private land of Krtol residents in Klačina, where the former local DPS , built a wastewater treatment plant without first resolving property issues.

Loan obligations were inherited from the former government

It is true that, with the existing long-term credit obligations that we have, with taking this loan that we need to get out of the problem left to us by the previous DPS-SD-HGI city administration, only in 2023 would “break” the credit limit of 10 percent realized current income in the year preceding the year of borrowing. However, we believe that with all the measures we have taken in the meantime to reduce public spending, cut the cost of local administration and, above all, its rationalization by laying off dozens of employees who were classic redundancies, the municipality has enough financial space and potential to approve this. a loan indebtedness of three million euros. All the more so because the credit obligations we already have were largely transferred to us by the former government, which borrowed tens of millions of euros from the German KfW bank for the construction of water and sewage infrastructure along the coast, and then those obligations to the greatest extent transferred to the coastal municipalities “, a source from the top of the Municipality told” Vijesti “.