About Local Finance Reform Project


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Major efforts have been invested over the past decade into reforming Serbia’s public finances. However, the mutual alignment and sequence of these reform activities have not been entirely satisfactory. This has led to unequal progress in both public financial management (PFM) and its harmonisation with broader public administration reform.


In response, PFM reform has been recognised as a key pillar of public administration reform (PAR) in Serbia, and has been incorporated into the PAR Strategy and Action Plan to implement the PAR Strategy covering the period from 2015 to 2017. At the same time, the Serbian Ministry of Finance has enacted a comprehensive PFM Reform Programme, which will serve as the primary set of guidelines for reforms to be implemented in this area from 2016 to 2020 to enhance the legal and institutional PFM framework in line with European Union (EU) and international standards. Reform of public finance at the local level occupies an important position in these reform efforts. Nearly 20 percent of all government spending and 23 percent of all public revenue in Serbia originate with local authorities. Between 2009 and 2013, local authorities on average had revenues of 6.3 percent of GDP, with their expenditures standing at 6.6 percent of GDP.


 In view of the importance and impact of PFM reforms at the local level on the success of the Government’s reforms in general, in 2016 the Swiss State Secretariat for Economic Affairs (SECO) initiated the Local Finance Reform Project (RELOF) in Serbia. The Project provided technical assistance and capacity-building in support of six cities and municipalities (Vranje, Knjaževac, Paraćin, Osečina, Sremska Mitrovica, and Užice) with the aim of enhancing the efficiency and transparency of their public financial management and achieving sustainable fiscal balances.


The aim of the RELOF Project was to assist local authorities in Serbia to develop processes and tools for effective and efficient public financial management. This is key for overall control, prioritisation, accountability, and efficiency in managing public funds and delivery of services, and, as such, the attainment of public policy objectives.



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The final beneficiaries of the Project are the citizens of the local authorities, who will be able to benefit from the better allocation and greater transparency of public spending and enhanced delivery of public services at the local level. The Project’s key partners were Vranje, Knjaževac, Paraćin, Osečina, Sremska Mitrovica, and Užice. Activities of the Project was focused on managers and staff of local authorities responsible for PFM. Key partners at the national level were the Ministry of Finance, the Ministry of Public Administration and Local Self-Government, the Standing Conference of Towns and Municipalities (SCTM), and principal stakeholders in broader PFM reform. The Project worked closely with other initiatives seeking to enhance PFM so as to achieve synergy, co-ordination, and effective use of the available resources.


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