Municipal Infrastructure Credit Lines

Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)

Partners: Standing Conference of Towns and Municipalities (SKGO), Serbian partner banks (Banca Intesa, UniCredit, Komercijalna Banka)

Project period: 2008 – 2022

Challenges

  • Serbian cities and municipalities face great needs for investments in the modernisation of public buildings, schools and kindergartens.
  • Investments are likewise needed for the reorganization and efficient management of communal services, particularly in the sectors of public lighting, water supply and sewage systems, solid waste collection and public transportation.
  • Many municipalities have only limited access to bank loans and rely mostly on state subsidies and transfers.
  • A public law reform enables municipalities to realize necessary investments through a combination of their own resources, transfers from the Serbian Republic budget and debt capital (bank loans).

Approach

The project enables primarily small and medium-sized municipalities in Serbia to finance necessary investments in municipal infrastructure through the provided credit line. Thereby, KfW supports the improvement of public infrastructure, which is an important requirement for successful economic development as well as for the strengthening of self-government capacities of the participating municipalities.

Selected local partner banks channel the programme credit loans to towns and municipalities for investments in public infrastructure. Moreover, the programme provides technical assistance to municipalities and banks. Consequently, these consultancy services assist municipalities in planning and implementing projects and support banks in establishing procedures for municipal financing.

The latest municipal credit line focuses on the promotion of municipal investments in energy efficiency and environmental protection measures.

Impact

  • Our partner banks have received ten credit lines worth a total amount of EUR 136 million.
  • Under this programme, over 90 municipalities and their public utility companies have financed more than 400 prioritized projects. Among these belong water supply and sewer networks, road construction and road repair, waste collection trucks and the renovation of municipal buildings (kindergartens, town halls).
  • With the help of our Technical Assistance measures, our partner banks were enabled to build up know-how and establish procedures for municipal financing.
  • At the same time, municipalities could develop their capacities for project preparation and implementation.
  • The Programme has been implemented in close cooperation with the GIZ project “Strengthening of Municipalities and Communal Services”.

Implemented by