information memorandum pancevo web

INFORMATION MEMORANDUMFOR THE ISSUE OF THE

CITY OF PANČEVOLONG-TERM DEBT SECURITIES (BONDS)

PROJECT FINANCED BYTHE EUROPEAN UNION CITY OF PANČEVO

Municipal Support Programme IPA 2007Good local governance, planning and service delivery

CITY OF PANČEVO2-4 Trg Kralja Petra I, 26000 PančevoPhone +381 13 346 393Fax +381 13 343 222 [email protected] www.pancevo.rs

MUNICIPAL SUPPORT PROGRAMME IPA 2007Good local governance, planning and service delivery

PROJECT FINANCED BYTHE EUROPEAN UNION

This publication was produced with financial assistance of the European Union. The sole respon-sibility for the content of this publication rests upon the City of Pančevo and it does not represent the official position of the European Union.



January 2012, Pančevo

CITY OF PANČEVO


Statement of Support

This document was prepared with the assistance of the Municipal Support Programme IPA 2007 financed by the European Union.


INVESTMENT DISCLAIMER

Pančevo (“Pančevo“, or the “City“, or the “Issuer“) shall be deemed fully responsible for the contents of this Information Memorandum. According to the best of belief, knowledge and information available to the City of Pančevo, the information contained in this Information Memorandum represents a com-prehensive and accurate representation of assets and liabilities, profit and losses, financial standing and operation of the City of Pančevo.

According to the best of knowledge of the City of Pančevo, no facts that could affect the comprehen-siveness and accuracy of this Information Memorandum had been left out.

On the other hand, no one but the City of Pančevo shall be authorized to provide information and issue statements regarding the invitation to tender for the provision of underwriting services for the bonds issue other than those contained in this Information Memorandum. Should such information or statements be given, they shall not be relied upon as the information and statements whose publication was approved by the City of Pančevo.

Neither publication of this Information Memorandum, nor sale or purchase of the bonds shall imply that the circumstances regarding the City had not changed since the date of publication of this Informa-tion Memorandum.

This Information Memorandum shall not be considered either as a recommendation for purchase or offer for sale issued by, or for the account of the City.

No warranties, explicit or implied, shall be issued by a third party concerning the accuracy and compre-hensiveness of the data presented herein.

Each potential bidder considering submitting a bid for provision of underwriting services shall be re-ferred to their own evaluation and assessment of the financial standing of the City of Pančevo and other relevant conditions, including the risks described in this document.

Unless otherwise indicated, all annual data, including information on financial statements have been based on calendar years. The figures presented in the Information Memorandum have been rounded up, therefore the figures indicating same type of data may vary and their totals may not correspond to their arithmetic aggregates. In this document, reference to EUR shall indicate Euro, USD United States Dollar, CHF Swiss Franc, and RSD or dinar shall refer to the currency of the Republic of Serbia, Dinar.

For the City of Pančevo

Vesna Martinović

The Mayor

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INFORMATION MEMORANDUMFOR THE ISSUE OF THE CITY OF PANČEVO LONG-TERM DEBT SECURITIES (BONDS)

TABLE OF CONTENTS

1. INFORMATION ON THE ISSUER ...................................................................................111.1. General Information ............................................................................................................11

1.1.1. Business Name, Seat, Address, Registration Number and Tax ID Number ......................... 111.1.2. Date of Establishment ....................................................................................................................... 111.1.3. Position of the Issuer in the Public Sector of the Republic of Serbia ...................................... 111.1.4. General Acts of the Issuer .................................................................................................................14

1.2. Trading in Securities of the Issuer ...................................................................................... 141.3. Geographic Location, Transport and Communication ...................................................... 141.4. Population, Employment and Earnings ............................................................................. 151.5. Local Economy .................................................................................................................... 181.6. Utility Infrastructure as a Precondition for Economic Development .............................. 221.7. Education, Culture and Sports ...........................................................................................28

1.7.1. Education ..............................................................................................................................................281.7.2. Culture .................................................................................................................................................. 291.7.3. Sports .................................................................................................................................................... 29

1.8. Joining the European Union ...............................................................................................30

2. OPERATION, ASSETS AND LIABILITIES OF THE ISSUER ............................................... 312.1. Activities of the Issuer ........................................................................................................ 31

2.1.1. Competence of the City of Pančevo ..............................................................................................312.1.2. Sources of Funding of the City of Pančevo ..................................................................................34

2.2. Assets and Liabilities of the Issuer ..................................................................................... 372.2.1. Real Estate, Facilities and Equipment ........................................................................................... 372.2.2. Share in Other Legal Entities ...........................................................................................................442.2.3. Concessions and Other Contracts on Public-Private Partnership ..........................................462.2.4. Major Capital Investments ...............................................................................................................462.2.5. Lien .........................................................................................................................................................482.2.6. Litigation and Other Proceedings ...................................................................................................482.2.7. Total Amount of Liabilities of the Issuer Not Due by the Date of Application ...................492.2.8. Total Amount of Outstanding Liabilities of the Issuer due on the Date of Application ..492.2.9. City Administration Employees ......................................................................................................49

2.3. Financial Information .........................................................................................................502.3.1. City of Pančevo Budget for the Previous Three Years ................................................................502.3.2. Excerpt from City of Pančevo Annual Balance Sheets for Past Three Years ....................... 552.3.3. Relevant Performance Indicators for Previous Three Years ......................................................632.3.4. Labor Costs ..........................................................................................................................................67

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3. DEVELOPMENT POLICY OF THE ISSUER .....................................................................693.1. Budget Projection for the Upcoming Years, Based on the Memorandum of the RS .......693.2. Capital Investment Plan for the Period 2009 – 2012 ...................................................... 723.3. Description and Implementation Plan for Projects Funded by Bond Issue ...................... 75

4. INFORMATION ON THE LOCAL GOVERNMENT ........................................................... 814.1. City Assembly of Pančevo .................................................................................................. 814.2. Executive Bodies of the City of Pančevo ...........................................................................834.3. Jurisdiction over Borrowing of the City of Pančevo ..........................................................84

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SUMMARY OF TABLES

Table 1. Distance between Pančevo and major cities in the region ...........................................................15Table 2. Estimated population trends in the period 2003 – 2010 .............................................................15Table 3. Population structure by type of activity, age and gender ............................................................15Table 4. Educational structure of population over 15 years of age ............................................................16Table 5. Number of employees in 2010 and their gender structure (in 000) .........................................16Table 6. Structure of employees by sectors in 2010 (000) ..........................................................................17Table 7. Cross-section of employees in March of each respective year ....................................................17Table 8. Average net salary per employee in March 2010 (RSD) ..........................................................................17Table 9. Average net salary per employee, by sector, 2009 ........................................................................ 18Table 10 Structure of enterprises .........................................................................................................................19Table 11. Number of enterprises by sectors (2009) .........................................................................................19Table 12. Employees in Pančevo by sectors in 2010 .......................................................................................20Table 13. Foreign trade (USD 000) .......................................................................................................................21Table 14. Investments in the private sector ...................................................................................................... 22Table 15. Number of fixed and ADSL connections in the City and other settlements in the municipality ....28Table 16. Functional classification of consolidated budget expenditures of the City, (000 RSD).......34Table 17. City budget revenue and earnings, 2009 - 2011 (RSD 000) .......................................................36Table 18. Financial information for city enterprises for 2009 and 2010 (RSD 000) ...............................45Table 19. Debt structure ........................................................................................................................................49Table 20. Number and educational structure of employees .........................................................................49Table 21. City budget execution, 2009-2011 (RSD 000) ..............................................................................50Table 22. Realization of budget revenues and proceeds of the City, 2009-2011 (RSD 000) .................51Table 23. Execution of expenditures and expenses from the City budget, 2009 – 2011 (RSD 000) ................... 53Table 24. Execution of City budget for 2009, 2010 and 2011 summative revenues and proceeds (RSD 000) ...54Table 25. Indirect budget beneficiaries subject to consolidation .................................................................56Table 26. Excerpt from consolidated City Balance Sheet (RSD 000) ..........................................................56Table 27. Excerpt from consolidated income statement of the City (RSD 000) ..................................... 57Table 28. Excerpt from report on capital expenditures and proceeds of the City (RSD 000) .............. 59Table 29. Excerpt from consolidated cash flow report of the City (RSD 000) .........................................60Table 30. Excerpt from consolidated reports on City budget execution (RSD 000) ................................61Table 31. Reclassified non-consolidated reports on execution of the City budget (RSD 000) ............63Table 32. Generated surplus in the current budget of the City (RSD 000) ...............................................65Table 33. Expenditures for long-term debt repayment (RSD 000) .............................................................65Table 34. Net current surplus in the City budget, after debt repayment (RSD 000) ..............................65Table 35. Managing debt of the City (RSD 000) ..............................................................................................66Table 36. City cash funds management (RSD 000) ........................................................................................67Table 37. City budget payroll expenditures (RSD 000) ..................................................................................67Table 38. Projection of the City of Pančevo budget proceeds and expenses, 2012 - 2016 (RSD).......69Table 39. Projection of the City budget cash flow and indebtedness (RSD) ............................................. 70Table 40. Table of capital projects and investments in Pančevo, 2011 – 2012 ........................................ 73Table 41. Pool construction project objectives ................................................................................................. 76

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Table 42. Tabular display of projects funded from municipal bond issue ..................................................80Table 43. City Assembly of Pančevo members’ structure, 2008 .................................................................82

SUMMARY OF FIGURES

Figure 1. Geostrategic position of the City in the SEE region .......................................................................14Figure 2. Regional road transport ........................................................................................................................23Figure 3. Local road transport ..............................................................................................................................23Figure 4. Regional river transport ........................................................................................................................ 24Figure 5. Greenfield location ................................................................................................................................38Figure 6. Location 1 “Mali Rit zone“ ....................................................................................................................39Figure 7. Location 2 “Zone along the Topola settlement and Danube port of Pančevo“ .....................40Figure 8. Location 3 “Zone along the Danube, south to the existing Petrohemija complex“ ..............41Figure 9. Location 4 “The most southern border of the General Urban Plan along Danube“ .............42Figure 10. Location 5 “Kudeljarski embankment zone” ...................................................................................43Figure 11. Olympic pool complex ..........................................................................................................................77

SUMMARY OF CHARTS

Chart 1. Exports from the South Banat region in 2010 by markets ...........................................................21Chart 2. City Assembly members’ structure ...................................................................................................82

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1. INFORMATION ON THE ISSUER

1.1. General Information

1.1.1. Business Name, Seat, Address, Registration Number and Tax ID Number

Business name: City of PančevoSeat: PančevoAddress: Kralja Petra Square, No. 2 – 4, 26000 Pančevo

City Assembly of Pančevo Registration number: 08006911Tax ID: 101831066

Executive Body of the City of Pančevo and the Mayor of the City of PančevoRegistration number: 08898553Tax ID: 106015153

1.1.2. Date of Establishment

Pančevo acquired the status of a city on 29 December 2007, by means of adoption of the new Law on Territorial Organization of the Republic of Serbia, and the local self-government consists of the City Assembly of Pančevo, the Mayor, the City Council and the City Administration.

1.1.3. Position of the Issuer in the Public Sector of the Republic of Serbia

According to the official data of the 2011 Census1 of the Statistical Office of the Republic of Serbia, Pančevo has 122,252 inhabitants and it is the administrative centre of the South Banat District.

The City of Pančevo, which lies on the northern bank of the river Tamiš, has a rich cultural and his-torical heritage. It has been mentioned since the 9th century under the various names: Bansif, Panuka, Panucsa, Panoca and Panzova.

Former Panuka was established on the foundations of a fort, built by Dacians and Romans, and de-stroyed by the Austrians in the mid-18th century.

When the Turks, who had ruled between 1520 and 1717, were banished from the territory of Banat, the town became a part of the Austrian Empire, as Tamiški Banat autonomous region.

In 1794 it became a free borough, when strict rules of military life gave way to urban development, trade, commerce and culture.

1 http://media.popis2011.stat.rs/2011/prvi_rezultati.pdf

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The city with its close surroundings lies in a dense network of settlements and cemeteries of the past epochs. The most famous archaeological site from this region is “Starčevo grad” dating from the Neo-lithic period, about 5,500 years BC, based on which the entire culture found between Starčevo, Serbia and Greece bears a common name, Starčevo culture.

The evidence of ancient systems of rule in this region is scarce. Since the Middle Ages, the region was under Hungarian, Turkish and Austrian rule, at the same time as the Serbian ethnic entity continu-ously co-existed. Some records, however insufficient, remain from the period when Banat was under the Turkish rule. Pančevo was in the hands of Ottoman Turks from 1552 until 1716, when the Turks retreated ahead of the army of the Austrian Count Claudio Floribunda Mersey. Austrians urbanized the dilapidated Turkish town, turning it into a marketplace. By 1718 Pančevo became the centre of the district thus receiving the right to organize annual fairs. Four years later, Abraham Mepis from Požuna was granted the license to produce beer and spirits, and as a result the tradition of brewing beer in the city runs continuously ever since 1722.

In the second half of the 18th century, the Military Border was established that served as the bul-wark for the preservation of Europe not only from Turkish invasion, but also from frequent epidemics of plaque which ravaged the south of Danube. Pančevo was the seat of the military regiment, however strict rules of military life forced the inhabitants of Pančevo, both Serbians and Germans, who were formerly the majority population, to demand from the Viennese court the status of a free military com-munity. By obtaining this status in 1974, the conditions were met to free the city from many military duties, to merge German and Serbian municipalities into a single community, and to begin with a more rapid urbanization and have artisans join the guilds.

According to the 1795 Census, the community had 4,588 inhabitants, predominantly male and orthodox, and significantly more artisans than traders. Pančevo experienced urban development in the early 19th century, when Brigadier General Michael Mihaljević paved the street and squares, built public and military buildings, installed public lighting and arranged the green urban areas. Along with the expansion and densification of the city, the planned formation of a solid urban core, which will give Pančevo its urban character, the trade and manufacturing strengthen thus creating the economic foun-dation based on which the city will prosper during the 19th century.

Pančevo in the late 19th century had two Orthodox churches and one Catholic, one Evangelical, Reformed and the Romanian Orthodox Church and a Synagogue. It had a Grammar School, Artisan School, Trade School, male and female civic schools, Senior Serbian Female School and Serbian Na-tional School. At the turn of the 18th century, the historic Pančevo and city squares were created in place of today’s city centre. Public and representative buildings were built and they still stand out in their size and decorative elements found on the facades. Those years were marked by an increasing number of associations: choir, artisans, farmers and sportsmen, established by citizens of all nations and religions. Shooting club was founded in 1813, Hunting and Gymnastic association in 1833, and the Serbian Church Choir in the 1838. In this general positive climate, free from military discipline, a group of dilettantes led by Nikola Đurković recited and sang songs composed based on lyrics written by Pančevo archpriest Vasa Živković. Strong impetus of development and social and cultural life in the city contributed to the abolition of the Military District in 1872.

Pančevo, as Hungarian municipal town was in the late 19th century connected with Bečkerek and Vršac by rail, and during this time the current of river Tamiš was also regulated. All this contributed to the development of trade and industry in the city. A big Industrial Agricultural Exhibition was held in 1905 at the National Garden, and 713 entrepreneurs and artisans from southern Hungary attended, thus symbolically marking a decisive step towards a market economy.

Further changes in the life of the city were the result of great political upheavals, of which the most important were the annexation of Vojvodina to Serbia at the end of World War I and the expulsion of the invaders from the city at the end of the World War II. In the post-war period, rapid industrialization and population inflow changed the makeup of the city.

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Formerly a part of Yugoslavia and then of the State Union of Serbia and Montenegro, Serbia has been an independent state since 2006 and the city today is an integral part of the Republic of Serbia.

According to the 2006 Constitution and the 2007 Law on Territorial Organization of the Republic of Serbia, Serbian territorial organization includes autonomous provinces and local self-government units. Serbia (without AP Kosovo and Metohija) has a total of 145 local self-governments, 122 municipalities, and 23 towns and cities (with total of 23 city municipalities not having local self-government status according to the Constitution), with the City of Belgrade (with its 17 city municipalities) with the special status as the capital.

Republic of Serbia has a unicameral parliament with 250 members. The last election was held on 11 May 2008.

The Coalition for European Serbia has 102 MPs, Serbian Radical Party has 56 members, Serbian Pro-gressive Party has 21, Coalition Social Party of Serbia – United Serbia – Party of United Pensioners PUPS has 20 members, Democratic Party of Serbia has 20 members, New Serbia 9, Liberal Democratic Party 12, ethnic minorities’ parties have 7 members, and there are 3 independent members.

The Government of the Republic of Serbia was established on 7 July 2008 with the appointment of Mirko Cvetković as the Prime Minister. Serbian government was restructured in March 2011.

The Government has a Secretary, 21 members (3 Deputy Prime Ministers and 18 ministers) and 17 ministries.

The president of the Republic of Serbia, Boris Tadić, was elected on 3 February 2008 for a five-year term of office. The next presidential election will be held in 2013. Detailed information about the Re-public of Serbia may be found on the Government of the Republic of Serbia website (www.srbija.gov.rs), as well as on the website of the National Assembly of the Republic of Serbia (www.parlament.gov.rs).

Following the year 2000, Serbia begun a process of political, economic and financial decentraliza-tion of government, primarily by adopting the new Law on Local Self-Government in 2002. This Law was afterwards amended in 2007, and accordingly the original jurisdiction of the local self-government primarily includes: developmental, spatial and urban planning, local economic development, water sup-ply and water management services concerning waste water, hot water and steam (heating), cleaning, landfills, markets, green and public spaces, public transportation and parking services, housing mainte-nance, construction and maintenance of local road infrastructure, construction and agricultural land management, pre-school education, and the cultural policy of the City. Some competences in the area of social policy, such as primary and secondary education as well as social policy, have been divided be-tween the national and local governments, by having the national government funding the employees’ salaries, and the local self-government bearing the costs of investments and maintenance.

The process of decentralization, predominantly in the area of finance, continued with the adoption of the Law on Local Self-Government Finance in 2006, and the Budget System Law, first adopted in 2002, and amended in 2005 and 2006, followed by the adoption of the most recent law in 2009, and latest amendments thereof in 2010.

In terms of macroeconomic indicators, the latest macroeconomic data of the Ministry of Finance of the Republic of Serbia2 from 17 November 2011 demonstrate that the estimated 2011 gross domestic product will amount to approx. EUR 32.81 billion, or EUR 4,518 per capita. The value of exports in 2010 amounted to EUR 7.39 billion, and the value of imports amounted to EUR 12.62 billion.

2 Ministry of Finance of the Republic of Serbia: http://www.mfin.gov.rs/UserFiles/File/tabele/2011%20novembar/Tabela%201_%20Osnovni%20makroekonomski%20indikatori.pdf

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1.1.4. General Acts of the Issuer

The supreme legal document of the City of Pančevo is the City Statute, adopted on 7 October 2008. The text adopted by the Legislation Committee of the City Assembly of Pančevo in 2008 may be found at the following URL, which may be accessed by using the QR code:http://www.pancevo.rs/userfiles/files/statut%20grada%20Panceva.pdf

According to the City Statute, the City bodies include: the City Assembly, the Mayor, the City Council and City Administration.

The Mayor and the City Council represent the executive powers, and the City As-sembly consists of 70 members.

Detailed information on the Assembly and the executive bodies of the City of Pančevo may be found in the sections of the Information Memorandum to follow.

1.2. Trading in Securities of the Issuer

The City of Pančevo has not yet issued any securities.

1.3. Geographic Location, Transport and Communication

Pančevo has a good geographic position in the South East Europe. The capital of Serbia, Belgrade is located in its vicinity (18 km), as well as the Corridor 10, the Danube transversal (Corridor 7), the state highway of the I category 1.9 (E-70): Belgrade – Pančevo – Vršac – Romania; and the international air-port Nikola Tesla (40 km), etc.

Figure 1. Geostrategic position of the City in the SEE region

Source: City of Pančevo

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Table 1. Distance between Pančevo and major cities in the region

City Population Distance

Belgrade 2.000.000 18 km

Podgorica 250.000 435 km

Niš 300.000 248 km

Novi Sad 300.000 96 km

Sarajevo 600.000 324 km


1.4. Population, Employment and Earnings

According to the preliminary results of the 2011 Census available on the internet website of the Statistical Office of the Republic of Serbia at the time of drawing up the Information Memorandum, the city of Pančevo has 122,252 inhabitants, which is by app. 4% less when compared to the data from the 2002 Census.

Table 2. Estimated population trends in the period 2003 – 2010

2003 2004 2005 2006 2007 2008 2009 2010

Population in the City 127.210 126.960 126.716 126.388 125.769 125.038 124.362 123.700

Total City population change -250 -244 -328 -619 -731 -676 -662

Population growth rate in the City (%) -0,19% -0,19% -0,25% -0,48% -0,58% -0,54% -0,53%

Population growth rate in the district (%) -0,46% -0,56% -0,69% -0,83% -0,89% -0,83 -0,82%

Population growth rate in Serbia (%) -0,23% -0,30% -0,39% -0,40% -0,42% -0,40% -0,40%

Source: Statistical Office of the RS

The average annual population growth rate in the respective period is negative for all the considered areas, thus indicating the presence of the de-population issue.

Table 3. Population structure by type of activity, age and gender

Area Active population in %

Active male popu-lation, age 15-65

Female active population, age

15-65

Elderly (> 65 years of age)

Republic of Serbia 45,32 33,27 33,85 16,54

South Banat District 45,48 33,9 33,52 15,17

Pančevo 46,51 34,56 35,29 13,9


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Table 4. Educational structure of population over 15 years of age

DescriptionCity (number) District (%) Serbia (%)

Total Male Female Total Male Female Total Male Female

No education 5.219 1.392 3.827 5,13 2,9 7,36 5,66 2,53 8,55

1 – 3 grades of primary school 1.428 404 1.024 2,15 1,4 2,88 2,00 1,23 2,70

4 – 7 grades of primary school 10.907 3.772 7.135 15,67 12,26 19.08 14,19 12,30 15,94

Primary education 25.388 10.993 14.395 26,12 26.16 26.48 23,87 22,97 24,72

High school education 51.511 28.928 23.583 41,43 47,95 35,34 41,07 46,08 36,43

College education 4.995 2304 2.691 4,13 3,97 4,29 4,51 4,94 4,11

University education 5.856 3.134 2.722 4,11 3,92 3,5 6,52 7,33 5,76

Unknown 1.276 756 520 1,25 1,44 1,07 2,18 2,62 1,79

Total population (>15) 107.580 51.683 55.897 100 100 100 100 100 100


The structured data in the table above show (based on 2002 Census) that 51% of City population over 15 years of age has completed the secondary level of education, 25% has completed primary education, 16% did not complete primary education, and 10% of population has completed college or university education.

The following table illustrates a cross-section of the total number of employees and their respective gender structure in 2010.

Table 5. Number of employees in 2010 and their gender structure (in 000)

Area

Employees Employees in companies, en-

terprises, institu-tions, coopera-

tives and organi-zations

Entrepreneurs, self-employed and

their employees

Number of employees per 1000 inhabitants

Total Share of females % Total

Republic of Serbia 1.796 44,8% 1.355 441 246 186

South Banat District 60 43,3% 44 17 201 171

Pančevo 32 42,9% 22 10 258 146


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Table 6. Structure of employees by sectors in 2010 (000)

Description City Employees’ struc-ture in the City (%)

Employees’ struc-ture in Serbia (%)

Total employees 24 100 100

Agriculture, hunting, forestry and water management 1 4 3

Fishing 0 0 0

Mining and quarrying 0 0 2

Manufacturing 8 33 23

Production and supply of energy, gas, water 1 4 3

Construction 1 4 5

Retail, wholesale and automotive repairs 2 8 14

Hotels and restaurants 0 0 2

Transport, storage and communication 2 8 8

Financial services 1 4 3

Real estate sale and rental 1 4 6

Public administration and social security 1 4 5

Education 2 8 10

Health and social work 3 13 12

Other community, social and individual services 1 4 4


Considering the macroeconomic trends present at the time of drawing up the Information Memo-randum, local economic development is reflected in the relatively low unemployment rate (18,70%), which is slightly below the average unemployment rate in the Republic of Serbia.

Table 7. Cross-section of employees in March of each respective year

Description 2007 2008 2009 2010 2011

Serbia 2.004.089 2.006.047 1.910.913 1.816.959 1.754.691

District 72.819 72.774 66.981 61.029 57.494

City 39.035 39.346 36.097 32.583 29.934


According to the Statistical Office of the Republic of Serbia, the average net salary at the end of 2010 in the Republic of Serbia amounted to approximately EUR 350, while the average net monthly salary in Pančevo was somewhat higher, approximately EUR 420.

Table 8. Average net salary per employee in March 2010 (RSD)

Description City District Serbia

Average gross salary (incl. taxes and contributions) 53.982 47.677 45.795

Average net salary (excl. taxes and contributions) 42.174 37.248 35.777


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Table below presents the data from the Statistical Office of the Republic of Serbia from the end of 2009 illustrating the average net salary per employee (excluding taxes and contributions).

Table 9. Average net salary per employee, by sector, 2009

Sector CityEUR

DistrictEUR

SerbiaEUR

Agriculture, hunting, forestry and water management 31.367 24.414 27.582

Fishing - 16.362 19.569

Mining and quarrying - 44.653 43.650

Manufacturing 36.440 35.667 25.539

Production and supply of energy, gas, water 44.051 40.515 44.239

Construction 37.061 28.259 27.175

Retail, wholesale and automotive repairs 16.853 16.027 23.757

Hotels and restaurants 11.584 12.862 18.176

Transport, storage and communication 37.527 34.029 36.880

Financial services 61.160 57.439 67.899

Real estate sale and rental 28.237 23.687 33.851

Public administration and social security 37.188 36.339 39.494

Education 34.077 32.582 35.666

Health and social work 35.574 36.253 36.030

Other utility, social and individual services 29.957 32.491 30.335

Average net salary - total 33.929 31.439 33.989


1.5. Local Economy

Geostrategic position, developed infrastructure, proximity to markets and available work force all play an important role in economic development.

City of Pančevo has significant comparative advantages: developed land, developed river and rail transport, location only 18 km away from the capital as the main market in Serbia, and on three riv-ers (Danube, Tamiš and Nadel), a port on the Danube, a section of the Adriatic oil pipeline that passes through the city, location on the international highway Belgrade – Temišvar, proximity to the Roma-nian border and most importantly, a highly qualified workforce.

Pančevo has a long-standing tradition of artisanship and industrial manufacturing, dating back to the early 18th century.

Crafts are slowly disappearing and their place is being replaced by small and medium enterprises that are proliferating and, in 2009, according to the information from the Serbian Business Registers Office, 1490 companies from Pančevo submitted their annual balance sheets.

Observed by activities, the majority of companies operate in the industry sector (35%), followed by trade (10%), agriculture (7%), transport (7%), construction (5%) and financial sector (3%).

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Pančevo is a home to many well-known industrial facilities: processing of petroleum products, man-ufacture of fertilizers, petrochemical complex, factories producing aircrafts, light bulbs, glass, furniture, textile and others.

Table 10. Structure of enterprises

Type of enterprise %

Large (>150 employees) 0.9

Medium (50-150 employees) 4.7

Small (<50 employees) 94.4

Total 100


Table 11. Number of enterprises by sectors (2009)

Description City

Agriculture, forestry and waterpower engineering 281

Fishing 5

Mining and quarrying 11

Processing industry 581

Production of electricity, gas and water 24

Construction 175

Retail, wholesale and automotive repairs 1.154

Hotels and restaurants 39

Transport, storage and communication 160

Financial services 6

Real estate sale and renting 254

Education 35

Health and social work 27

Other utility, social and individual services 46

Unclassified 3

Enterprises – total 2.801


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Table 12. Employees in Pančevo by sectors in 2010

Description Number of employees Share (%)

Employees – total 24 100

Agriculture, forestry and waterpower engineering 1 4

Fishing 0 0

Mining and quarrying 0 0

Processing industry 8 33

Production of electricity, gas and water 1 4

Construction 1 4

Retail, wholesale and automotive repairs 2 8

Hotels and restaurants 0 0

Transport, storage and communication 2 8

Financial services 1 4

Real estate sale and renting 1 4

State administration and social insurance 1 4

Education 2 8

Health and social work 3 13

Other utility, social and individual services 1 4


More than 60% of employees actively work in all four sectors: manufacturing (33%), health and social work (13%), retail and wholesale trade (8%) and transport (8%).

In terms of size, in the structure of enterprises small companies are dominant (94.4%), whereas large companies which constitute only 0.9% of all companies employ more workers percentage wise.

Pančevo is one of the most important industrial centers both in Vojvodina and Serbia. The industrial structure is highly diversified, and the following companies operating in different economic sectors are recognized as the most important for industrial development: crude oil processing - “NIS-Oil Refin-ery” Pančevo, production of petrochemicals - “HIP-Petrohemija” joint stock company, production of fertilizers, nitrogen compounds and carbamides - “HIP-Azotara” Ltd., manufacture of metal struc-tures - “Tehnomarket” Ltd., construction and maintenance of roads and other facilities of importance to public transport -“Vojvodinaput”, production of airplanes and related equipment - “Utva - airline industry” Ltd., machines and tools - “Utva Milan Premasunac” Kačarevo, forestry and other forestry activities - “Vojvodinašume” - “Banat”, growing wheat, legumes and oilseeds - “Stari Tamiš” joint stock company, production of starch and starch products - “Jabuka Starch Industry” joint stock com-pany, production of ready-made feed for farm animals - “Factory for Animal feed Jabuka” joint stock company, grain storage and manufacture of grain mill products - “Granexport” joint stock company, production of paper and cardboard containers - “Fimpak” Ltd., printing of chromo-cardboard pack-aging - “6 October“, production of agricultural products, sales of agricultural machinery and equip-ment -” Almeks“ Ltd., services of loading, unloading, reloading, storage, weighing of goods, reloading of containers - “Luka Dunav” joint stock company, design and production of clothing - “Passage Group”, the production of household chemicals - “Panonija” joint stock company.

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In 2010, foreign trade between the South Banat region and foreign companies reached a total of 986.42 million dollars, with exports worth 566.21 million dollars (57.4%of the total trade value) and imports worth 420.21 million (42.6% of the total trade value).

In the observed period a surplus in the amount of USD 146 million was generated. The exports of South Banat region account for 16,33% in total exports of Vojvodina, which is about

5,78% of total exports of Serbia. The imports of South Banat region account for 8,88 % in the total imports of Vojvodina, and 2,51% in the total imports in Serbia.

Considering the results of foreign trade in the municipalities of the South Banat region for the pe-riod January- December 2010, it is evident that out of eight municipalities of South Banat region the following generated commodity trade surplus: Bela Crkva (4,5 million), Kovin (19,08 million), Opovo (1,59 million), Pančevo (90,71 million), Plandište (2,7 million), Vršac (34,3 million), while Alibunar (5,1 million) and Kovačica (1,89 million) recorded deficit in USD.

Chart 1. Exports from the South Banat region in 2010 by markets


The South Banat region and the city of Pančevo can be particularly proud of consistently achieving a surplus in the field of foreign trade. In 2010, South Banat companies mostly exported to Italy, Ger-many, Russia, Romania, Ukraine, Bosnia and Herzegovina and Greece.

The leading foreign partners in terms of imports in 2010 were Bulgaria (USD 65,27 million), Germany (USD 50,68 million), Romania (USD 49,15 million), Italy (USD 29,04 million), China (USD 27,24 mil-lion), France (USD 24,82 million), and Bosnia and Herzegovina (USD 22,59 million). Imports from these seven countries account for 65% of the total imports of the region in this period.

Table 13. Foreign trade (USD 000)

Pančevo 2008 2009 2010

Export 392.674 195.214 331.616

Import 240.264 186.827 240.900

Balance 152.410 8.387 90.716


Export countries14%

11%

11%

11%10%

8%

31%

4%

Italy (14%)

Germany (11%)

Russia (11%)

Romania (11%)

Ukraine (10%)

BIH (8%)

Greece (4%)

Other (31%)

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According to types of goods exported from the South Banat region, the first place belongs to the exports of medicines worth USD 92,48 million, followed by special density polyethylene of 0,94 and higher, worth USD 75,35 million, polyethylene with special density less than 0,94 worth USD 68,24 million, propene worth USD 47,03 million, and a mixture of other aromatic hydrocarbon worth USD 46,9 million.

In addition to plastic mass products, primary forms, fertilisers and steel structures, the food industry also has a significant share in foreign trade for Pančevo. From the food industry the mostly exported were grain mill products, grains, starches and starch products. On the other hand, the mostly imported item in agriculture and foods industry were grains

The total amount of realized investment in the private sector in the period 2001 – 2010 in Pančevo exceeds EUR 600 million.

A somewhat more detailed structure of foreign direct investments, by sectors, shows that the most represented was the metal processing industry.

Table 14. Investments in the private sector

Name of enterprise Country of origin Activity Investment

yearType of

investment

GAZPROM NEFT / NIS Russia Production of oil derivatives 2009 Privatisation

BAU HOLDING BETEILIGUNGS/VOJVODINA PUT Austria Construction of roads and other

relevant traffic facilities 2009 Acquisition

SHOLZ/PANSIROVINA Germany Production, processing and trade of secondary raw materials 2006 Privatisation

AVIV ARLON GROUP Israel Real estate development and con-struction

2010 (Phase I)

Greenfield invest-ment

EN-A1 GROUP Slovenia Real estate development and con-struction 2009 Greenfield invest-

ment

MULK HOLDINGS LTD. I TEHNO-MARKET DOO/ALUBOND EUROPE UAE Production of aluminium compos-

ite panels 2010 Joint venture


1.6. Utility Infrastructure as a Precondition for Economic Development

Pančevo has good road and rail links with Belgrade and the location on the national highway E70 (Belgrade – Pančevo – Vršac – Romania).

“CORRIDOR 10” (COMPANY “CORRIDOR 10” LTD.) (Salzburg – Ljubljana – Zagreb – Belgrade – Niš – Skoplje – Thessaloniki), located close to the city, with sections that stretch from Belgrade to Horgoš and from Niš to Dimitrovgrad. The position of Pančevo at the confluence of rivers Tamiš and Danube (Danuber transversal – Corridor 7) contributes to the attractiveness of the city for business, as it directly links the city with the central and southeastern Europe.

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Road Transport: PUBLIC ENTERPRISE “ROADS OF SERBIA”

The territory of Pančevo is covered with a network of roads with a total length of 147 km. All na-tional highways and local roads of the first category have modern surface.

The city of Pančevo road network accounts for 16.53% of the total road network in the South Banat district. Most notably, Pančevo is the “gate” on route south and north of Banat, and the link with the rest of Serbia.

There is a wide network of roads connecting Pančevo with many cities and towns:National highway 1.9 1) (E-70): Belgrade-Pančevo-Vršac-Romania;State motorway 24: 2) Kovin-Pančevo-Kovačica;A network of local roads, 147 km long, linking the villages and the City of Pančevo.3)

Figure 2. Regional road transport


Highway М-1/9 (Е70): Belgrade – Pančevo – Vršac - Romania

Figure 3. Local road transport


State motorway М-24 connecting Pančevo with Kovačica and Kovin municipalities

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River transport:

Since Pančevo is situated at the confluence of the Danube and Tamiš rivers, it is surrounded by sig-nificant water resources:

Transportation port (The Port of Danube – „Luka Dunav”);•

The navigability of the river Tamiš, 2 km upstream; •

Transverse Danube (Corridor 7);•

North Sea – Rhine – Main – Danube – Black Sea and further to the east. •

Given that the Danube is defined as the European corridor 7, a significant increase of the importance of water transport can be expected in the future, but primarily in transit. The total length of the Danube in Serbia is 588 km, in the Banat region 148 km, and in the city of Pančevo about 30 km. The distance between the port “Luka Dunav” in Pančevo and Belgrade port is 10 km. A large part of Banat and the municipalities bordering the Danube are potentially suitable for inclusion in the network of waterways of Europe (Rhine-Main-Danube Canal). On the left bank of the Danube, after 1153 kilometer, there is the ‘Luka Dunav’ (The Danube Port) Complex. The development area of the port has also been built, covering an area of 240 hectares. This complex is surrounded by the Danube, the water transport chan-nel of the chemical industry, a railway track with marshalling yard, the international E-70 highway, and the river Tamiš. The Port - ‘Luka Dunav’ is of a basin type. It is 1000 m long and 210 m wide, covers 21 hectares, and its depth enables sea and river boats of up to 5000t to sail into the port at the lowest water level. The length of the water line around the port complex, where it is possible to build a vertical quay, is 6500 m.

Figure 4. Regional river transport


Rail transport: PUBLIC ENTERPRISE “SERBIAN RAILAWS”

As in road transport, Pančevo is an important junction in the rail transport linking the capital with the eastern part of Banat, the North and South Banat. Pančevo is in the immediate vicinity of the Bel-grade – Bar railway.

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Air transport:

Pančevo is only 40 km away from the international airport „Nikola Tesla“ in Belgrade.

PUBLIC ENTERPRISE AIRPORT “Nikola Tesla”

In the northern part of Pančevo, within the factory complex of the aviation industry “Utva Pančevo”, there is a sports airport “Pančevo”. The grass runaway is about 900m long and 60m wide. The airport has a concrete apron that is 100 m long, and an air traffic control tower.

Public transport:

The city public transport has been entrusted to “Autotransport Pančevo” company, with 68 buses at its disposal. All parts of the city are connected by eight bus lines, with buses running from 5 pm to 10.30 pm. Three lines have been extended to connect the surrounding villages and settlements: Starčevo, Jabuka, Kačarevo, Stari Tamiš and Banatsko Novo Selo. Buses leave every 30 minutes. There is a bus line to the surrounding villages and it is in operation from 3am to 10.30 pm. During ”rush hour”, buses leave every 30 minutes, and during non-rush hours, at every 60min. Numerous bus lines have been set up between Pančevo and Belgrade, and buses leave at nearly every 15 minutes.

Construction and City Planning:

The Public utility company “Directorate for Construction and City Planning of Pančevo” deals with the development of construction land, construction and reconstruction of buildings and installa-tions, construction and maintenance of roads and other road networks in the city and urban areas, includ-ing winter maintenance of roads, maintenance of city utility facilities, maintenance of public lighting in the city, maintenance of premises and construction and maintenance of utility facilities of Pančevo settle-ments, city and landscape planning, design of planning documentation of the utmost complexity: the physical plans of the city – municipality, general plans, general regulatory plans, construction projects and the like, which are the basis for developing the city and the investment incentives, and contribute to the articulation and satisfaction of the interests and needs of citizens, businesses and institutions in the city.

Power Supply:

“Power Supply Company Vojvodina Novi Sad – Power Supply Company Pančevo” deals with the distribution of electricity in the territory of South Banat. Consumers of electricity are supplied from the existing nine substations of 110 kV , which are owned by the “Power Supply Company“. There are four categories of consumers: 1. households, 2. general electricity consumption, 3. consumers of low voltage electricity, and 4. consumers of high and medium voltage electricity. Power Supply Company Pančevo has a total of 135.419 active consumers: 121.061 consumers in the category of households, 12.596 consumers in the general electricity consumption category, 1.568 consumers of low voltage electricity, and 194 consumers of high and medium voltage electricity. In the area of Pančevo, consum-ers are supplied with electricity from five substations. Three stations are of 110 kV owned by the Power Supply Company. The other two substations of 110 kV and 220 kV are located in the southern industrial zone and are owned by the consumers themselves. Pančevo has a total of 50.010 active consumers in

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the category of households, 6.671 in the category of general electricity consumption, 830 consuming low voltage electricity and 97 consuming medium voltage electricity.

Water Supply and Sewage:

Public Utility Company “Water Supply and Sewage” deals with raw water collection, treatment, distribution of drinking water, maintenance of water networks, wastewater collection and maintenance of the sewage system.

Citizens of Pančevo have access to the highest quality drinking water in Vojvodina. Water is ex-tracted from the wells that are 40 meters deep and pumped into a water treatment plant. Groundwater of the Danube alluvium is used for this process. The total capacity of Pančevo springs is 800l/s, with an average annual production of 12 million m3. The City of Pančevo, along with Starčevo, Omoljica, Banatski Brestovac and Ivanovo, is covered with about 300km of water networks, with diameter of 80 to 800mm. Over 31.000 households, i.e. 96.000 people in Pančevo, use the water supplied by the city water supply system. Other settlements have separate systems, and by connecting to the city water supply they will be able to use quality tap water.

Pančevo has built a separate system for channeling both waste and rain water. The waste water sewer system, with the total length of 200 km, has over 9.000 buildings connected to it, which is 75% of the population. There is no plant for waste water treatment. The Feasibility Study and the Master Plan have been prepared, laying foundations for carrying out this capital project.

The rain water sewer system is 40 km long, covering 40% of city streets. Part of the water is drained by open channels.

Waste management:

Services related to the collection, transportation, removal and disposal of municipal waste, for natural and legal persons in the territory of Pančevo, are provided by the Public Utility Company “Higijena”.

The company is introducing the system for sorting waste, enabling users to sort municipal solid waste according to their components. Recyclable raw materials (PET, plastic, paper, cardboard, glass, metal, etc.) are disposed of in special-purpose labeled bags or containers, separated from other mixed municipal waste that is disposed of in special bags or vessels. Special- purpose bags and waste contain-ers (cans and containers), can be ordered at the head office of “Higijena” at 57 Cara Lazara St.

The company also provides emergency services for cleaning, collecting and transporting all types of waste. Construction waste is disposed of by “Higijena” at the inert waste landfill, whereas waste of animal origin is disposed of in special coolers of the Sanitation service, before being transported to the pound in the City of Sombor. The company is ready to provide emergency services based on a call from legal and natural persons and utility inspection.

Planning and maintenance of public green areas:

The Public Utility Company “Zelenilo” was established primarily to provide services involving more efficient maintenance of public green as infrastructural element of the urban environment. The Compa-ny’s main activities include: construction and maintenance of public green, production of planting ma-terials, provision of funeral services, and provision of services related to green markets. Today, “Zelenilo” is one of the largest companies in South Banat, with high development potential and 380 employees of various profiles and professions. The company has four operating divisions: “Joined Services”, “City Green Areas”, “Green Markets” and “Cemeteries”.

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“City Green Areas” is a working unit which maintains 200 hectares of cultivated green and produces nursery trees, shrubs, horticulture, seasonal flowers and turf grass. It also deals with exterior and interior decorations, building paths, patios, fountains, devices for children’s playgrounds and the provision of ma-chinery (trucks, auto-basket, pay-trailers, bulldozers, loaders). The sale of planting material is carried out at the nursery on the Bavanište road and in the company’s shop located at the Green market.

“Green markets” is a working unit, that includes the main green market, four satellite markets (Strelište, Tesla, Kotež and Sodara) and the commodity market, “Airport”.

Green market plateau has 950 stands selling agricultural, industrial and handicrafted products, halls for selling frozen and fresh fish, cakes, milk, and 132 shops. The open commodity market “Airport” is an open shopping centre with 2735 stands and 68 shops.

“Cemeteries” is a working unit, taking care of seven cemeteries - Orthodox, Catholic, New, Jewish, Evangelical, Reformed and Vojlovica cemetery.

Gas pipeline:

The gas pipeline network covers the majority of the territory of Pančevo. High pressure gas pipe-lines come from six different directions. Public Company “Srbijagas” (Novi Sad) supplies the City of Pančevo with gas via two working units “Transport Pančevo” and “Pančevo Distribution’. “Transport Pančevo” deals with transportation of high pressure gas and distribution to consumers directly con-nected to these pipelines. “Pančevo Distribution” provides consumers with gas via medium and low pressure pipelines.

The gas supply to the settlements in the territory of Pančevo is carried out by four high-pressure gas pipelines: Batajnica-Pančevo, Kikinda-Pančevo, Pančevo-Tilva Pančevo-Smederevo. “Pančevo Distribu-tion” distributes gas in the territory of Pančevo to the following local communities: Gornji grad, Centar, Mladost, Kačarevo, Jabuka, Glogonj, Stari Tamiš, Dolovo, Banatsko Novo Selo and Banatski Brestovac.

Heating:

Public Utility Company „Grejanje” provides heating in the territory of Pančevo. There are two heating plants - “Kotež” and “Sodara”. Heating plant “Kotež” has a capacity of 53.3 MW and heating plant “Sodara” currently has a capacity of 26.5 MW, both of which are supplied with natural gas. Apart from these two plants, there are three more facilities: at 13 Karadjordjeva St. 13, 8.6 MW capacity, at 23 Sinđelićeva St., 0.814 MW capacity, and at 89 Sveti Sava St., 0.28 MW capacity. The PUC “Grejanje” supplies approximately 11,500 consumers in residential areas and about 400 commercial consumers. About 47% of households in the city are supplied by a remote heating system, and about 10% of house-holds use hot water from the system.

Taking into account the availability of energy in existing heat sources, “Grejanje” has sufficient ca-pacity to connect new users to the system.

In the modern world, developed telecommunications infrastructure has become the standard not only in urban, but also rural areas. The biggest telecommunication service provider in Serbia, as well as in Pančevo, is “Telekom”. The second land-line telephone operator is “Orion Telecom”, while in terms of mobile telephony, apart from “Telekom”, services are provided by two more operators: “Telenor” and “VIP”. Internet services are provided by the “Telekom”, SBB, “Orion” and a number of smaller operators. SBB, “TV Total” and “Digi SAT” provide cable television services.

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“Telekom Srbija”

At the moment there are 46.149 installed POTS (regular land-line) connections in Pančevo. In other inhabited areas in the territory of the municipality there are 13.721 connections. In total there are 59.870 numbers. The digitalization percentage is over 96%. The installation of devices that will accom-modate over 2.500 land-line connections (CDMA technology) is planned for the next year.

The number of installed ADSL connections is given in the following table: in Pančevo there are 15.639, while in the rural area there are 2832 connections. More than 3.000 ADSL connections are planned to be installed in the future.

Table 15. Number of fixed and ADSL connections in the City and other settlements in the municipality

Description Land-line ADSL % (LL/ADSL)

City of Pančevo 46.149 15.639 33,89

Settlement in municipality 13.721 2.832 20,64

Total 59.870 18.471 30,85


“Тelekom Srbija” maintains and services telecommunications facilities and networks.

1.7. Education, Culture and Sports

1.7.1. Education

The educational structure of the population (aged 15 and over) is as follows: the largest number of population has completed secondary school education (48%), followed by those who have completed primary school education (23%), higher education 4,6%, and university education, 5,44%. Percentage of illiterate population is 2,66% (aged 15 and over).

Pančevo has 21 primary and 8 secondary schools (Grammar School, Medical, Electrical Engineering, Economics and Trade, Technical, Mechanical, Agricultural and Music High School), and based on current trends in the labor market, it also provides some new educational directions in secondary schools: survey-ing technicians – surveyors, recycling technicians, multimedia electricians, electricians for telecommunica-tions, technicians for tourism, mechatronics technicians and mechanical technicians for motor vehicles.

Pančevo‘s vicinity to Belgrade offers the possibility to study at about 69 different faculties, thus giving it a huge advantage in human resources development. Since Belgrade is near Pančevo, young people stay in their home town during studies thus contributing to its further development.

Pančevo is also a university city, with the following faculties: The Faculty of Management - FOM (Novi Sad), The International University (Novi Pazar) and The Faculty of Dental Medicine. Basic aca-demic studies at these faculties provide the following professional profiles: graduate dentists, general lawyers, the interior lawyers (criminology), instructors, psychologist, English language teachers, man-agement and economic consultants, information technology consultants, operational management consultants, media management consultants and business management consultants in informatics.

Many companies use English in their daily operations and it is an integral part of education in all schools and institutions of informal education. There are about 15 language schools and the most popular foreign languages are English, German, Italian, French, Spanish and Russian.

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1.7.2. Culture

City of Pančevo is renowned for its vibrant cultural life, represented through the activities of 15 city cultural institutions: The City Library, The National Museum, The Historical Archives, The Cultural Heritage Preservation Institute, The Pančevo Cultural Centre, The Youth Hall and nine cultural centers in different settlements.

In addition to cultural institutions there are also numerous art and culture associations, informal groups, citizens’ associations and other civil sector organizations, all of which complement the cultural live of the city and the area.

Pančevo was the first city in Serbia to adopt the City Cultural Development Strategy for the period 2010 - 2015, with a vision to incorporate Pančevo into the European cultural heritage with its different cultural identities, culture of peace and continuous development of conditions for expressing different cultural forms. The mission of this important strategic document is to preserve and develop cultural heritage and create new values that contribute to the development of civil society and stimulating atmosphere for the work of different agendas of the city’s cultural life. The areas of cultural develop-ment include: cultural heritage preservation, revival of industrial heritage, accessibility and openness of cultural institutions, transformation of youth halls in the settlements, cultural exchange, festivals, multiculturalism, intercultural dialogue, development, creating the audience and alternative stage.

1.7.3. Sports

Pančevo is known for its long tradition of nurturing the spirit of sport; this is a city with over a hun-dred of registered clubs and home to great legends of Serbian sport.

Some of them are: Branislav Petrić and Karolj Lajko (boxing), Stevan Bena (soccer), Branislav Pokrajac, Ljubomir Obradović, Dejan Perić and Žikica Milosavljević (handball), Milenko Tošć (basketball), Vesna Popović (volleyball), Marina Munćan (athletics), Dušan Novakov (rugby). Perić and Milosavljević were declared the best in the world in their team positions, and in terms of individual sports, karate champion Predrag Stojadi-nov brought gold to Pančevo in the absolute category, while the current rulers of the planet are the swimmer Nađa Higl in 200 meter breaststroke and Slobogan Bitević in the karate category up to 84 kilograms.

The City Administration has established the public utility company “Mladost“ responsible for main-taining sports facilities and fields in the city, mostly concentrated in two sports and recreation centers: SRC “Mladost“ and SRC “Strelište“. Within the above mentioned companies operates the Centre for development sports, which provides assistance in monitoring psychophysical predispositions of boys and girls who participate in sports life.

Taking into account that about 130 000 citizens live in Pančevo and surrounding settlements, many of whom have the need to be physically active, as well as undoubtedly high level of sports development in the city, lack of sports facilities and fields is more than evident. But Pančevo authorities have started preparation of the strategic documents which would facilitate the city development and well being of its citizens. The City Assembly adopted The Sports Development Strategy until 2014, which represents the base for future progress. Pančevo is a city in which children can practice sports free of charge, with the tendency of becoming the regional sports centre with developed infrastructure, in which the tal-ented and successful are supported. Pančevo’s intention is to become a city in which sports develop-ment is an important factor of overall progress.

Construction of a modern Olympic size swimming pool in Pančevo will begin in 2011. This big proj-ect will undoubtedly be finalized, which will once again prove that the city authorities care for the needs of the citizens who will get one more place for recreation and healthy living. This project, of course will put to rest the problems of our outstanding athletes like Nađa Higl, and the city on Tamiš River there will gain more opportunities to develop world class sportsmen and sportswomen.

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1.8. Joining the European Union

On 9 November 2010 the European Commission adopted the annual strategy on the enlargement of the European Union – EU Enlargement Package 2010. This Package represents the annual assessment of the enlargement agenda and provides an overview of the current state of affairs concerning prepa-rations, upcoming challenges and methods for advancement of Western Balkans, Turkey and Island. Serbia submitted its application for the EU membership in 2009. On 25 October 2010 General Affairs Council forwarded the application to the Commission. The Commission is currently processing the ap-plication and preparing its Opinion.

Serbia Progress Report3 for 2010 was also adopted on 9 November 2010. According to the assess-ment of the European Commission, Serbia has made progress in political democratization, with stable government and broad congruence in orientation of political parties towards the strategic goal of join-ing the EU. According to the Commission assessment, despite the serious impact of economic and financial crisis, the state of Serbian economy has improved in 2010, highlighting the progress made toward harmonization of Serbian legislation with European standards.

It was assessed that Serbia implements provisions of the Interim Agreement and realizes progress in meeting the requirements of the Stabilization and Association Agreement in numerous fields, particu-larly in agriculture, science and research and statistics.

On 24 November 2010 European Commissioner for Enlargement and Neighborhood Policy Mr. Štefan Fule, submitted to the Government of Serbia the Questionnaire on the Application for Mem-bership of Serbia in the European Union to be filled out as a requirement for acquiring the candidate status for EU membership. Serbian Government prepared and submitted answers to questions from the Questionnaire, following which the European Commission will begin the process of drafting an opinion, which takes about a year.

Head of EU Delegation to Serbia, Vincent Degert met with the Serbian Prime Minister Mirko Cvetković on 12 October 2011 and presented the opinion of the European Commission on Serbia’s candidacy for EU membership.

In the opinion, published on that day in Brussels, the European Commission issued a recommenda-tion to grant Serbia candidate status for EU membership, and to open membership negotiations as soon as Serbia makes progress in resolving issues relating to the dialogue with Priština4.

Since 2007 Serbia has annually received around EUR 200 million from funds under Instruments for Pre-Accession (IPA) Assistance of the European Union.

3 Serbia Progress Report: http://www.seio.gov.rs/upload/documents/Izvestaji/izestaj_o_napretku_srbije_2010_sa_%20aneksom.pdf 4 http://www.seio.gov.rs/%D0%B2%D0%B5%D1%81%D1%82%D0%B8.39.html?newsid=1040

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2. OPERATION, ASSETS AND LIABILITIES OF THE ISSUER

2.1. Activities of the Issuer

2.1.1. Competence of the City of Pančevo

The City exercises competences established under the Constitution and the Law, tasks within the framework of rights and duties of the Republic of Serbia, delegated under the law. The Republic in ac-cordance with the type and scope of delegated tasks shall ensure the funds for performance thereof.

The City shall under its competence, through its bodies, and in accordance with the Constitution and the law:

Adopt City development programmes, 1) Adopt City spatial plan, 2) Adopt urban development plans, 3) Adopt the Budget and the Annual Balance Sheet of the City, 4) Regulate the rate of City revenue, as well as methods and criteria for determining the amount 5) of local fees and charges,Regulate and ensure the delivery and development of public utility activities (water treatment 6) and distribution, treatment and disposal of rainwater and wastewater, production and supply of steam and hot water, in-line urban and suburban road transportation, maintenance of cleanliness in the City, maintenance of landfills, regulation, maintenance and use of farmers’ markets, parks, public green, recreational and other public areas, public parking lots, lighting, regulation and maintenance of cemeteries and burial services, etc), as well as ensure organizational, financial and other conditions for performance thereof;Establish public utility and other public enterprises to deliver utility and other activities of 7) relevance for the City;Ensure maintenance of residential buildings and their safe use, and determine the amount of 8) fees for upkeep thereof;Implement the procedure of eviction of illegal tenants from apartments and common areas in 9) residential buildings;Adopt programme for construction land development, regulate and ensure performance of 10) activities in construction land development and use, and determine the amount of fees for construction land development and use;Adopt plans and programmes and implement local economic development projects, and 11) ensure improvement of the overall economic activity framework in the City,Regulate and ensure the use of office space under its control, determine the amount of fees for 12) office space use, and supervise the use thereof;Ensure protection of the environment, adopt programmes for use and protection of natural 13) resources and the environment, and local action and recovery plans, in accordance with strategic documents and own interests and specificities, and determine special fees for environmental protection and improvement;

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Regulate and ensure performance of tasks related to construction, rehabilitation and 14) reconstruction, maintenance, protection, utilization, development and management of local and unclassified roads and streets in urban settlements;Regulate and ensure special conditions and organization of taxi services;15) Regulate and ensure the organization of transport in liner shipping in the territory of the City, 16) and determine coastal and water sections that can be used for construction of hydro structures and vessel storage;Establish stockpiles and determine their size and structure, with consent from competent 17) ministries, for the purpose of meeting the needs of local population;Establish institutions and organizations in the field of preschool and primary education, and 18) culture of importance for the City and national minorities, primary health care, physical education, sports, child protection and tourism, and monitor and ensure their functioning;Undertake measures for ensuring and realizing health care of interest for the citizens in the 19) territory of the City;Ensure conditions for education of national minorities;20) Establish institutions in the field of social protection and monitor and ensure their functioning, 21) issue permits for the commencement of work of social protection institutions established by other legal and natural persons, determine eligibility for the provision of social services, establish norms and standards for conducting activities of institutions it founded, issue regulations concerning rights to social protection and perform state guardian activities;Support the development of various forms of self-help and solidarity with persons with special 22) needs, as well as persons who are in substantially unfair position compared to other citizens, and promote activities and provide assistance to organizations of disabled persons and other social aid organizations in the territory of the City; Organize activities related to protection of cultural heritage of importance for the City and 23) national minorities living in the territory of the City, encourage the development of cultural and artistic creativity of all national minorities in the territory of the City, ensure resources for financing and co-financing of cultural projects and programmes of importance for the City and national minorities living in the City, and create conditions for operation of archives, institutes, museums, libraries and other cultural institutions founded by the City;Organize protection from natural and other major disasters and fire protection, and create 24) conditions for removal thereof or mitigation of their consequences;Adopt principles for protection, use and cultivation of agricultural land, and ensure 25) implementation thereof, determine erosive areas, ensure the use of pastures and perform tasks to improve farming;Regulate and determine the manner for using and managing resources, public wells and 26) fountains, establish water management requirements, and issue water management approvals and permissions for structures of importance for the City;Ensure and provide conditions for preservation, use and improvement of areas with natural 27) healing properties,Encourage and ensure the development of tourism in the territory of the City and determine 28) the amount of tourist fee,Ensure the development and improvement of hospitality industry, crafts and trade, regulate 29) working hours, and places where certain activities can be performed, and provide other conditions for performance thereof,Manage the City property and use state owned means, and ensure conservation and 30) maximization thereof,Regulate and organize activities related to keeping and protecting domestic and exotic 31) animals,Organize legal activities to protect rights and interests of the City, 32)

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Adopt strategies and special measures for the purpose of removing inequality and creating 33) equal opportunity conditions for realizing human and minority rights,Encourage and support the development of cooperatives,34) Organize legal aid services for citizens,35) Ensure realization, protection and promotion of human rights and individual and collective 36) rights of minority and ethnic groups; ensure realization, protection and promotion of gender equality, adopt strategies and special measures for creating equal opportunities for exercising rights and eliminating inequalities,Determine languages and letters of national minorities officially in use in the territory of the 37) City and ensure equal use thereof in procedures before bodies of the City, public enterprises, institutions and organizations and services founded by the City; ensure inscription of names of places, rivers, lakes and other geographic names, names of streets and squares, City bodies, traffic signs, public notices and warnings, and other public inscriptions in languages and letters of national minorities officially in use in the City according to its traditions,Ensure public information of importance for the City and ensure conditions for public information 38) in Serbian language and languages of national minorities officially in use in the territory of the City, establish television and radio stations for the purpose of reporting in language of national minorities officially in use in the City, as well as for the purpose of reporting in the language of national minorities that is not officially in use, when such reporting represents the achieved level of minority rights,Prescribe sanctions for violations of City regulations,39) Establish inspection services and inspect enforcement of regulations and other general acts 40) within the jurisdiction of the City, Establish communal police, ensure and organize performance of their tasks in accordance with 41) the law,Regulate organization and work of reconciliation committees, 42) Regulate and ensure the use of City name, emblem and other symbols,43) Support the work of civic organizations and associations,44) Regulate and crate conditions for caring for the youth, adopt and realize the strategy and 45) the policy action plan for youth, establish youth offices and create conditions of youth organization,Plan in peaceful times measures for realizing own functions in the state of war or emergency 46) that specifies the execution of defense duties and obligations prescribed by the law and derived from the Defense Plan of the Republic concerning rescue and protection of people and property in the territory of the City, and determine obligations of legal entities from within its own competence, andPerform other activities of direct interest for citizens in accordance with the Constitution, the 47) law and the Statute.

The City shall be independent in performance of activities within its competence, in accordance with the Constitution, the law and the Statue.

The following table depicts the execution of the budget in the period 2009 – 2011, with the impor-tant comment that the data concerning the 2011 budget execution was generated on the basis of available information and projections, as the 2011 annual balance sheet of the City was in prepa-ration at the time of drawing up the Information Memorandum.

Expenditures are presented based on functional classification that represents a classification of ex-penditures based one tasks within the competence of the City of Pančevo, in accordance with the Law on Local Self-Government (“Official Gazette of the Republic of Serbia”, No. 129/2007) and the Statute of the City.

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Table 16. Functional classification of consolidated budget expenditures of the City, (000 RSD)

Classifi-cation Description

Execution 2009 Execution 2010 Execution 2011

Amount % Amount % Amount %

0 Social care 108.905 3,56 133.573 4,45 141.508 3,89

1 General public services 736.218 24,04 683.080 22,76 846.483 23,26

3 Public order and safety 5.553 0,18 5.556 0,19 7.618 0,21

4 Economic affairs 300.272 9,81 371.961 12,39 507.473 13,94

5 Environmental protection 380.441 12,42 443.645 14,78 530.825 14,59

6 Housing and public utilities 568.037 18,55 426.699 14,22 547.484 15,04

7 Health 18.502 0,60 22.064 0,74 35.660 0,98

8 Recreation, culture and religion 421.863 13,78 388.315 12,94 407.180 11,19

9 Education 522.212 17,05 526.584 17,54 615.254 16,90

TOTAL EXPENDITURES 3.062.004 100,00 3.001.477 100,00 3.639.485 100,00


Based on functional classification of consolidated budget execution of the City, the conclusion is that in the past three years the most prominent were the expenditures and expenses concerning gen-eral public services (on average 22% of total expenditures in the period 2009 – 2010), housing and public utilities (17%), and education (17%).

The expenditures for environmental protection and recreation, culture and religion were also note-worthy. What follows are the expenditures for economic affairs, social protection, health and public order and safety, etc.

2.1.2. Sources of Funding of the City of Pančevo

For the delivery of the tasks delegated to the City under the Constitution and the law, and for the performance of tasks delegated under the law within the framework of rights and obligations of the Republic, the City shall collect revenue and proceeds determined under the Law on Local Self-Govern-ment Finance (“Official Gazette of the RS”, Nos. 62/2006 and 47/2011).

City affairs shall be funded from: original and shared revenues, transfers, revenues from borrowing and other revenues and earnings set forth by law. For meeting the needs of population in the City or a portion thereof, funds may be ensured from self-contributions that are regarded as budget revenues of the City.

Original revenues shall be taxes, fees and other charges the base and rate and/or amount of which shall be determined by the City Assembly of Pančevo, in accordance with the law, and other revenues generated by the City through own activities. Those shall include:

Property taxes, excluding taxes for the transfer of rights and taxes on inheritance and gift •

Local administrative fees; •

Local utility fees; •

Tourist fee; •

Construction land use fee; •

Construction land development fee; •

Environmental protection and improvement fee; •

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Revenues from concessions for public utility purposes and revenues from other concessions the •

City enters into in accordance with the law; Fines imposed in misdemeanor proceedings for offenses prescribed by the Assembly and assets •

confiscated in such proceedings; Revenues from lease or use of publicly owned real estate used by the City and indirect budget •

beneficiaries; Revenues from sale of moveable assets used by the City and indirect budget beneficiaries; •

Revenues generated from activities of City bodies and organizations; •

Revenues from interest on funds from the City budget; •

Revenues from donations to the City; •

Revenues from self-contributions; •

Other revenues established by law. •

Shared revenues shall be taxes and fees the base and rate of which shall be determined by the Republic, with generated revenues shared between the Republic and the City. Shared revenues that are entirely or partially transferred to the City, by the territory of which they were generated, shall be:

Income tax:•

Income from: agriculture and forestry, self-employment, real estate, lease of moveable property, - personal insurance; 80% of income tax paid according to employee’s place of residence; - Other revenues in accordance with the law; -

Inheritance and gift tax•

Tax on transfer of property rights•

Annual fee for motor vehicles, tractors and trailers •

Fee for: environmental pollution, use of mineral resources, extracted material from rivers, use of •

forests, water use, change in use of agricultural land, use of natural medicinal factors; Tourist fee•

Other fees in accordance with the law. •

Transfers from the budget of the Republic that belong to the City budget under the law shall be: General transfers, • determined annually based on realized gross domestic product and distrib-uted to all local self-governments according to criteria established by law;Conditional • transfers used for funding certain functions and expenditures.

Any additional transfers or delegating of new tasks to the City shall impose an obligation of the Re-public to ensure matching funds and revenue sources needed to perform such tasks.

City revenues shall consist from general budget revenues that may be used for any purpose in ac-cordance with the law and the Decision on the Budget of the City, excluding revenues whose purpose has been established by law.

Collection of own budget revenues of the City of Pančevo shall be conducted in accordance with the law and other regulations, regardless of budgeted amounts for certain types of revenues.

City Tax Administration of Pančevo shall be responsible, inter alia, for regular and enforced collection of local public revenues, unless specified otherwise by particular decision of the City Assembly, then for implementing the tax procedure (assessment, collection and control over local public revenues) and en-suring rights and obligations of taxpayers, as well as keeping the register of payers of own City revenues based on information derived from the Unified Register of Taxpayers.

The following table depicts the execution of the budget in the period 2009 – 2011, with important note that the data concerning the 2011 budget execution was generated on the basis of available information and projections, as the 2011 annual balance sheet of the City was in preparation at the time of drawing up the Information Memorandum.

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Table 17. City budget revenue and earnings, 2009 - 2011 (RSD 000)

No. DescriptionExecution 2009 Execution 2010 Execution 2011

Amount % Amount % Amount %

1. ORIGINAL REVENUES AND PROCEEDS 1.301.010 44,11 1.431.770 46,00 1.513.569 41,7

Property tax 215.007 7,29 251.275 8,07 165.774 4,6

Local fees, charges and other proceeds 628.936 21,32 635.756 20,42 733.407 20,2

Construction land use fee 241.264 8,18 281.936 9,06 236.143 6,5

Payroll tax, mixed and unspecified proceeds, and items 43.292 1,47 16.196 0,52 53.881 1,5

Construction land development fee 88.108 2,99 84.267 2,71 164.418 4,5

Donations 13.950 0,47 11.494 0,37 19.178 0,5

Proceeds from sale of non-financial assets 4.975 0,17 8.452 0,27 4.300 0,1

Proceeds from borrowing 65.478 2,22 142.394 4,57 136.469 3,8

2. SHARED REVENUES AND PROCEEDS 1.648.712 55,89 1.681.021 54,00 2.112.481 58,3

Shared income tax 1.057.431 35,85 1.118.667 35,94 1.582.461 43,6

Other shared taxes and fees 190.486 6,46 150.249 4,83 104.690 2,9

Current transfers 326.419 11,07 351.307 11,29 412.754 11,4

Capital transfers 6.377 0,22 39.527 1,27 538 0,0

Proceeds from sale of financial assets 67.999 2,31 21.271 0,68 12.038 0,3

TOTAL REVENUES AND PROCEEDS (1+2) 2.949.722 100,00 3.112.791 100,00 3.626.050 100,0


Based on generated revenues and proceeds over the previous three budget years it can be concluded that original revenues and proceeds amounted to 44% on average, while shared revenues and proceeds amounted to an average 56% of the City of Pančevo budget. The most significant sources of City fund-ing were shared income tax (39% on average), other shared taxes and fees (5% on average) and current transfers (22% on average).

Following the decline in the total budget revenue and proceeds in 2009 by 21,6% when compared to 2008, year 2010 recorded a growth of 5,5% thereof mostly due to increase in capital transfers by 519,8% and proceeds from borrowing by 117,5%.

2011 also recorded a growth in total revenues and proceeds in the amount of approximately 16,5% primarily based on revenues from local taxes and fees and compensation for land development.

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2.2. Assets and Liabilities of the Issuer

The Statute provides that the City shall have own assets, independently managed and disposed with by the City bodies, in accordance with the law. This provision of the Statute is enforceable only in terms of independent management, but not concerning the disposition with assets. The City shall first obtain an approval from the Property Directorate of the Republic of Serbia to dispose with own property pending adoption of the Law on Public Property that will resolve the issue in accordance with the Constitution of the Republic of Serbia which envisages that local self-governments shall have own assets. Forms of disposition with property shall be: sale, mortgage, use of property as source of capital when establishing new legal entity, and others.

2.2.1. Real Estate, Facilities and Equipment

Pursuant to the Law on Planning and Construction from 2009, local self-government units have become entitled to (public) ownership over construction land for which they were prior to the adop-tion of the aforesaid law recorded in the public register of real estate and associated rights as holders of rights to use.

Publicly owned construction land or construction land owned by local self-government units may be alienated or leased for construction, or in the process of public bidding or tendering by means of a public announcement, according to market conditions and in accordance with the Law on Planning and Construction.

All economic sectors are developed in Pančevo, including: industry, agriculture, construction, con-struction materials industry, trade, hospitality, transport and communications, housing and utility ser-vice, financial and other services.

The strongholds of economic development of Pančevo are the industry and agriculture, and the priority for the upcoming period will certainly be development and improvement of tourism.

Department for support to investors provides basic information about business situation in the city of Pančevo, locations suitable for investment, and available human resources, and keeps record of real-ized investments in the territory of the city.

The Department performs the following tasks: Recording available capacities suitable for investment and business development (available 1) land and facilities in public and private ownership),Communicating with potential investors and providing information based on submitted 2) inquires,Recording needs of potential investors and participating in creating offers in cooperation with 3) other competent services,Cooperating with the Department for Local Economic Development and Strategic Planning 4) and the Agency for Economic Development of the City of Pančevo and other competent services in order to promote the city as investment location.

Planned Greenfield zones are defined pursuant to the General Urban Plan as well as areas where it will be possible to build commercial/industrial buildings and facilities for other purposes, the influence of which meets the environmental protection criteria.

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Figure 5. Greenfield location


Benefits from investing in the City of Pančevo:Fiscal benefits (ten-year tax exemptions for large investments, accelerated write-off of fixed •

assets), Exemption from customs duties for imported production equipment, •

Financial benefits (free flow of capital, profits and dividends), •

Local subsidies for using the infrastructure (low prices and low cost of services), •

Stimulating manufacturing activities through reduction in construction land development fees •

based on the number of employees.

Benefits from investing in the City of Pančevo:The location on Corridor 10 that links Europe with the Middle East, •

Free Trade Agreement with the EU and Russia, (0% customs duty), Free Trade Agreement with •

CEFTA, Belarus and Turkey Educated and skilled workforce•

Simplified regulations on foreign trade and foreign investment •

The lowest corporate tax rate in Europe - 10%•

The lowest income tax rate – 12%•

City of Pančevo offers five Greenfield locations to potential investors:

Green field 3

Green field 1 Green field 2

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LOCATION 1 – “Mali Rit zone”

Area: Approximate area 64 ha Ownership: City of PančevoPlanning grounds: General Urban Plan Purpose: Sports and business zoneCondition: Infrastructurally unequipped (Detailed Regulation Plan under preparation)

Figure 6. Location 1 “Mali Rit zone“


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LOCATION 2 – “Zone along Topola settlement and Danube port of Pančevo”

Area: Approximate area 81 ha Ownership: City of PančevoPlanning grounds: General Urban PlanPurpose: Production activities and transport centerCondition: Infrastructurally unequipped (Detailed Regulation Plan in preparation)

Figure 7. Location 2 “Zone along the Topola settlement and Danube port of Pančevo“


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LOCATION 3 – “Zone along the Danube, south to the exiting Petrohemija complex”

Area: Approximate area 190 hа Ownership: City of PančevoPlanning grounds: General Urban PlanPurpose: Industrial zone, production activities, primarily information technology, textile and metal processing, as well as goods transport center. Condition: Infrastructurally unequipped (Detailed Regulation Plan in preparation)

Figure 8. Location 3 “Zone along the Danube, south to the existing Petrohemija complex“


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LOCATION 4 – “The most southern border of the General Urban Plan along Danube“

Area: Approximate area 90 haOwnership: City of PančevoPlanning grounds: General Urban Plan Purpose: Agricultural processing and storage, sports and recreation Condition: Infrastructurally unequipped (Detailed Regulation Plan in preparation)

Figure 9. Location 4 “The most southern border of the General Urban Plan along Danube“


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LOCATION 5 – “Kudeljarski embankment zone”

Area: Approximate area 4,6 haOwnership: City of PančevoPlanning grounds: General Urban PlanPurpose: Production activities including a section intended for small businessesCondition: Infrastructurally partially equipped (detailed urban plan in place)

Figure 10. Location 5 “Kudeljarski embankment zone”


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Information on available locations of undeveloped construction land may be found on the following websites:

City of Pančevo website – Invest in Pančevo: •

http://www.pancevo.rs/Investirajte_u_Pancevo-91-1

City of Pančevo website – Community Profile: •

http://www.pancevo.rs/documents/Profil-grada.pdf

A complete overview of land available for construction of commercial and industrial facilities, as well as facilities for family and residential living may be found on the website of the Directorate for Construction of the City of Pančevo: http://www.direkcija.pancevo.rs

In terms of managing all other property, except land, the City of Pančevo like all other local self-governments, is entitled to use but not dispose with such property. The owner of property is the Republic of Serbia also having the disposition right.

Potential investors may obtain further information from the representatives of aforementioned in-stitutions:

PE “Directorate for Construction and City Planning of Pančevo“, telephone number +381 •

(0)13 343 754Secretariat for the Environmental Protection, City Planning, Construction, Housing and Utilities, •

telephone number. +381 (0)13 308 840

2.2.2. Share in Other Legal Entities

The City of Pančevo is the founder of 6 public utility companies and 3 public enterprises: PUC “Water Supply and Sewerage• ” deals with production and distribution of drinking water;PUC “Higijena“ • deals with waste management and functioning of the parking service. PUC “Mladost“ deals with maintenance and management of sporting facilities. PUC “Zelenilo” • performs maintenance of the public green, manages, furnishes, develops and builds public market places, performs funeral and auxiliary activities, interior and exterior deco-ration, mechanization and production of planting material.PUC “Grejanje“ • produces and supplies steam and hot water. PUC “ATP Pančevo“• provides urban and suburban passenger transport services and bus sta-tion services. PE “RTV Pančevo“ • is registered for broadcasting television and radio program. PE “Housing Agency of the City of Pančevo”• deals with developing real estate projects, pur-chase, sale, lease and manage real estate for its own account and those of third parties. PE “Directorate for Construction and City Planning of Pančevo” • deals with the develop-ment of construction land, construction and reconstruction of buildings and installations, roads and road networks.

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The following table depicts the main financial indicators of city enterprises extracted from their an-nual balance sheets for 2009 and 2010.

Table 18. Financial information for city enterprises for 2009 and 2010 (RSD 000)

Enterprise Total revenue

Total expenditure Total assets Total

liabilities Equity Capital share

PUBLIC UTILITY COMPANIES

“Water Supply and Sewage”2009 451.272 556.744 1.826.449 82.827 1.743.622 100%

2010 532.035 571.864 1.893.651 91.533 1.802.118 100%

“Higijena”2009 501.580 496.382 754.611 129.063 625.548 100%

2010 553.437 552.435 752.809 124.801 628.008 100%

“Mladost”2009 91.274 98488 257.216 28.499 228.717 100%

2010 87.650 98.211 249.055 26.526 222.529 100%

“Grejanje” 2009 716.096 776.485 1.243.216 940.683 277.893 100%

2010 743.709 802.123 1.260.238 1.017.562 214.132 100%

“ATP Pančevo”2009 588.872 627.399 497.237 217.675 279.562 100%

2010 609.548 608.197 480.626 201.028 279.598 100%

“Zelenilo“436.007 435.383 281.297 43.918 237.379 100%

423.575 422.907 281.932 44.231 237.701 100%

PUBLIC ENTERPRISES

“RTV Pančevо”2009 85.750 85.729 17.965 12.391 5.574 100%

2010 67.580 68.055 19.939 16.861 3.078 100%

“Housing Agency Pančevo”2009 82.827 72.869 394.140 132.738 261.402 100%

2010 72.929 91.230 365.963 117.782 248.181 100%

“Directorate for Construction and City Planning“

2009 841.601 843.675 5.662.361 679.629 4.970.904 100%

2010 508.306 508.180 6.686.359 1.581.299 5.093.106 100%

TOTAL 2009 3.795.279 3.993.154 10.934.492 2.267.423 8.630.601

2010 3.598.769 3.723.202 11.990.572 3.221.623 8.728.451


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2.2.3. Concessions and Other Contracts on Public-Private Partnership

City of Pančevo has so far signed one contract on public-private partnership.

Agency for the Economic Development of the City of Pančevo Agency for the Economic Development of the City of Pančevo was founded in August 2010 as

public-private ownership of 5 founders: City of Pančevo•

Božić and Sons Company•

Tehnomarket LLC•

„Utva Milan Premasunac“, JS, Kačarevo•

General association of artisans and other entrepreneurs of the municipality of Pančevo. •

The Agency was founded in partnership with the private sector from the Pančevo municipality in order to create an optimal business climate for easier and more efficient dealing with the economic is-sues. The City of Pančevo is a majority owner with 60% while the above mentioned companies have an equal share in the remaining 40%. As part of the final arrangements for the AEDCP, the agreement with the “Petrohemija” company was concluded involving the lease of premises in the former “Snežana” where the Agency for the Economic Development is located.

2.2.4. Major Capital Investments

Pančevo City Assembly in 2008 borrowed to finance capital investment in the total amount of RSD 165.860.539 on the basis of two loans:

The first loan was approved by Banca Intesa in the amount of EUR 1.271.123 which on the date of the transfer amounted to RSD 115.860.539 loan lot number 56-420-1302086.8 from 02. September 2008. The loan is indexed in foreign currency with the interest rate 3М Euribor + 2,5% and RSD 91,15 exchange rate for the EUR.

The funds were disbursed for the following purposes: Construction of the Cultural centre in Glogonj, in the amount of RSD 9.650.136;•

Construction of prefabricated building in the Josif Marinković street (Club for the elderly), in the •

amount of RSD 11.677.555;Renovation of the Public Broadcasting Company “Pančevo Radio and Television”, in the amount •

of RSD 9.795.219;Continuation of works on the new Dolovo – Pančevo landfill, in the amount of RSD •

15.000.000;Construction and reconstruction of fecal sewage in settlements and preparation of project doc-•

umentation, in the amount of RSD 29.999.999;Roads and public lighting in the “Stari Tamiš” local community in the amount of RSD 9.737.630 •

andConstruction of the National Garden in the amount of RSD 30.000.000.•

The second loan was also approved by Banca Intesa, in the amount of RSD 50.000.000 contract number 56-420-1320620.1 from 22. December 2008. The loan is in RSD, with the 3M Belibor + 0,2% interest rate.

The funds were disbursed for: Continuation of works on the Dolovo – Pančevo landfill in the amount of RSD 50.000.000.•

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The loans in accordance with the decision of the City Assembly have been raised with a grace period of one year and repayment period of 5 years.

During 2008 all due installments in the amount of RSD 72.654.730 were repaid in due time, for: Purchase of busses (based on the Contract concluded in 2006 and funds disbursed in the same •

year), in the amount of RSD 23.171.492;Construction and reconstruction of the Sveti Sava street between Moše Pijade and Šemićeva •

streets (based on the Contract concluded in 2006 and funds disbursed in 2006 and 2007), in the amount of RSD 21.951.440 andWorks on the New Dolovo – Pančevo landfill (based on the Contract concluded in 2006 and •

funds disbursed in 2006 and 2007), in the amount RSD 27.531.797.

All accrued and due interest on all loans was serviced on a regular basis in the amount of RSD 39.008.409 as well as other costs related to loan disbursement in the amount of RSD 385.657.

Pančevo City Assembly in 2009 borrowed for financing capital investment from Erste Bank in the amount of EUR 497.812 which on the day of transfer of funds amounted to RSD 49.529.180 loan lot number 10853220-5100420191 from 29. December 2008. The loan is indexed in foreign currency with the interest rate 3М Euribor + 3,4%, 91,46 exchange rate for EUR.

The following purposes were financed from disbursed funds: Programme for Water Supply in a Medium-sized Municipalities in Serbia – Open Programme •

KWF phase I in the amount of RSD 15.429.180;Design and construction of the facility for disposal of municipal waste in the amount of RSD •

10.000.000;Continuation of construction of the New Dolovo – Pančevo landfill in the amount of RSD •

24.100.000.

The loan was in accordance with the City Assembly decision granted with a one-year grace period and 5-year repayment period.

During 2009, due installments were serviced in the amount of RSD 156.183.966 for the following: Purchase of buses (based on the Contract concluded in 2006 and funds disbursed in the same •

year) in the amount of RSD 26.793.980;Construction and reconstruction of the Sveti Sava street between streets Moše Pijade and •

Šemićeva (pursuant to the Contract concluded in 2006), in the amount of RSD 25.359.238;Works on the New Dolovo – Pančevo landfill (pursuant to the Contract concluded in 2006), in •

the amount of 31.704.693;Construction and reconstruction of sewage and drainage network with project documentation •

in Pančevo and other settlements (pursuant to the Contract concluded in 2007), in the amount of RSD 43.804.306;Construction of the gym at the “Jovan Jovavnović – Zmaj” primary school in Pančevo (pursuant •

to the Contract concluded in 2007), in the amount of RSD 5.021.263;Construction of the kindergarten in the Misa settlement in Pančevo (pursuant to the Contract •

concluded in 2007), in the amount of RSD 17.527.705;Servicing of the Lot I loan from 2008 in the amount of RSD 5.972.781.•

All accrued and interest due was serviced on a regular basis for all loans in the amount of RSD 34.542.454 as well as other expenses related to disbursement of funds in the amount of RSD 592.779.

Pančevo City Assembly in 2010 borrowed for financing of capital investment with from the Uni-credit Bank in the amount of EUR 1.393.284 which on the date of transfer of funds amounted to RSD 196.209.928 loan lot number 1901/11 from 04. June 2010. The loan is indexed in foreign currency with the interest rate 3М Euribor + 3,75%, at exchange rate RSD 103,66 against EUR.

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The following projects were financed from the disbursed funds: Repair of electrical installations in 4 high and 2 elementary schools and the relocation of the •

heating installations from the floor in one elementary school in the total amount of RSD 31.427.716;Renovation of the Public Broadcasting Company “Pančevo Radio and Television”, in the amount •

of RSD 34.504.743;Expansion of the “National Garden – Barutana” park in the amount of RSD 14.999.000;•

Participation in the procurement of busses for the PUC “ATP Pančevo” in the amount of RSD •

40.000.000;Completion of construction of sewage system in Topola, in the amount of RSD 25.000.000;•

Completion of construction of sewage in Kudeljarski embankment, in the amount of RSD •

25.000.000;Restoration and repair of wells, in the amount of RSD 20.000.000;•

Construction of the water supply network in the amount of RSD 5.278.470.•

The loan, in accordance with the decision of the City Assembly was granted with a one-year grace period and a 5-year repayment period.

In 2010 all due installments were serviced in the amount of RSD 201.416.443 for the following: Purchase of buses (pursuant to the Contract concluded in 2006 and funds disbursed in the same •

year), in the amount of RSD 29.319.162;Construction and reconstruction of the Sveti Sava street between streets Moše Pijade and •

Šemićeva (pursuant to the Contract concluded in 2006), in the amount of RSD 27.786.061;Works on the New Dolovo – Pančevo landfill (pursuant to the Contract concluded in 2006), in •

the amount of RSD 34.684.054;Construction and reconstruction of sewage and drainage network with project documentation •

in Pančevo and other settlements (pursuant to the Contract concluded in 2007), in the amount of RSD 47.969.223;Construction of the gym at the “Jovan Jovavnović – Zmaj” primary school in Pančevo (pursuant •

to the Contract concluded in 2007), in the amount of RSD 5.498.685;Construction of the kindergarten in the Misa settlement in Pančevo (pursuant to the Contract •

concluded in 2007), in the amount of RSD 19.194.244;Servicing of the Lot I loan from 2008 in the amount of RSD 26.965.015;•

Continuation of works on the New Dolovo – Pančevo landfill (pursuant to the Contract con-•

cluded in 2008), in the amount of RSD 9.999.999.

All accrued and due interest were serviced on a regular basis for all loans in the amount of RSD 28.177.032 as well as other loan disbursement expenses in the amount of RSD 951.947.

2.2.5. Lien

City of Pančevo does not own property over which lien has been constituted.

2.2.6. Litigation and Other Proceedings

City of Pančevo does not participate in any litigation or other proceedings pending before a court or an administrative body.

49


2.2.7. Total Amount of Liabilities of the Issuer Not Due by the Date of Application

The current level of debt on 30 November 2011 amounted to approx. RSD 557 million. The following table shows the structure of debt based on which the main information pertaining to

the status of realized loans can be seen.

Table 19. Debt structure

Borrowing year Period Interest rate Initial debt (EUR) Paid(EUR)

Debt on 30.11.2011 (ЕUR)

2006 2006-2012 Euribor 3М+2,9% 4.464.606 3.494.053 970.554

2007 2007-2013 Euribor 3М+2,2% 3.533.255 2.061.065 1.472.190

2008 2008-2014 Euribor 3М+2,5% 1.271.123 558.880 712.243

2008* 2008-2014 Belibor 3М + 0,2% RSD 50.000.000 RSD 19.166.667 RSD 30.833.333

2009 2009-2015 Euribor 3М+3,4% 497.812 91.265 406.547

2010 2010-2016 Euribor 3М+3,75% 1.393.284 45.690 1.347.594

2011 2011-2017 Euribor 3М+3,41% 151.101 - 151.101

TOTAL (EUR) 11.311.181 6.250.953 5.060.228

*The loan is not indexed and shown in the total debt amount.Source: City of Pančevo

2.2.8. Total Amount of Outstanding Liabilities of the Issuer due on the Date of Application

City of Pančevo regularly services its obligations and has no outstanding liabilities due.

2.2.9. City Administration Employees

The total number of employees and the number of employees with a certain level of education in the local self-government and budget beneficiaries in the past three years is presented in the following table.

Table 20. Number and educational structure of employees

Education

2008 2009 2010

City administration

Budget beneficiaries

City administration


City administration


University 123 138 136 149 135 153

College 36 235 36 230 35 231

High School 125 198 124 200 123 195

Other 17 154 9 151 8 148

Total 301 725 305 730 301 727


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2.3. Financial Information

2.3.1. City of Pančevo Budget for the Previous Three Years

The City independently disposes with belonging revenues and proceeds, in accordance with the law and the decision on the budget of the City of Pančevo, adopted in accordance with the Budget System Law (“Official Gazette of the RS“, Nos. 09/02, 87/02 and 54/09). Pursuant to the Law, the budget shall represent the decision that estimates revenues and proceeds and determines expenditures and expenses for a given year. The budget shall consist of general and special parts. The general part of the budget shall include:

Income statement, net acquisition of non-financial assets and budget surplus or deficit; •

Overall fiscal surplus or deficit; •

Funding account: use of the surplus or funding deficit •

Evaluation of new loans and debt repayment, and •

Current and permanent budget reserve. •

The following table depicts the execution of the City of Pančevo budget in the 2009 – 2011, with important notice that the data concerning the 2011 budget execution was generated on the ba-sis of available information and projections, as the 2011 annual balance sheet of the City was in preparation at the time of drawing up the Information Memorandum.

Table 21. City budget execution, 2009-2011 (RSD 000)

Classifi-cation Description Execution

2009Execution

2010Execution

2011

А REVENUES AND PROCEEDS 2.816.245 2.949.126 3.477.543

7 CURRENT REVENUES 2.811.270 2.940.674 3.473.243

8 PROCEEDS FROM SALE OF NONFINANCIAL ASSETS 4.975 8.452 4.300

B EXPENDITURES AND EXPENSES 2.905.819 2.800.060 3.413.772

4 CURRENT EXPENDITURES 2.667.509 2.670.416 3.041.623

5 EXPENDITURES FOR PURCHASE OF NON-FINANCIAL ASSETS 238.310 129.644 372.149

NET PURCHASED NON-FINANCIAL ASSETS (8-5) (233.335) (121.192) (367.849)

I BUDGET SURPLUS/DEFICIT (A-B) (89.574) 149.066 63.771

9,6 ACCOUNT FUNDING

9 Proceeds from borrowing and financial assets 133.477 163.665 148.507

6 Repayment of debt and purchase of financial assets 156.185 201.416 225.713

II FISCAL SURPLUS/DEFICIT (I+9-6) (112.282) 111.315 (13.435)

3 SURPLUS FROM PREVIOUS YEARS 441.551 329.269 440.584

III TOTAL SURPLUS/DEFICIT (II+3) 329.269 440.584 427.149


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Based on presented data on the City of Pančevo budget execution, it can be noted that the total generated surplus in the period 2009 – 2011was between RSD 329 and 427 million.

In the period 2009 – 2011 generated fiscal deficit (except in 2010 when there was a fiscal surplus) was between RSD 112 and 13,5 million, due to growth of capital investment expenditures (purchase of nonfinancial assets) under circumstances of reduced revenues and proceeds of the City.

Fiscal deficit was mostly covered from transferred unspent funds from previous years, and have gen-erated a total fiscal surplus at the end of the observed period.

Table 22. Realization of budget revenues and proceeds of the City, 2009-2011 (RSD 000)

Classification Description Execution 2009 Execution 2010 Execution 2011

7 REVENUES 2.811.270 2.940.674 3.473.241

71 Taxes 1.752.124 1.908.594 2.340.612

711 Taxes on income, profits and capital gains 1.057.431 1.118.667 1.582.461

71111 Income taxes 815.033 832.357 1.257.636

71112 Tax on income from self-employment 77.758 81.889 109.631

71114 Tax on income from property 57.580 64.649 62.817

71116 Tax on income from personal insurance 8 42 46

71118 Self contributions 277 158 109

71119 Other income taxes 106.773 139.572 152.222

712 Income fund taxes 1.681 (435) 104

713 Property tax 221.137 260.911 246.518

71312 Property tax 124.255 157.274 165.768

71331 Inheritance and gift tax 6.130 9.636 8.651

71342 Tax on capital transactions 90.681 93.918 72.093

71361 Tax on income from shares and interest 71 83 6

714 Taxes on goods and services 431.303 460.752 435.070

71442 Utility fee for organizing music program in hospitality facilities 16 59 39

71443 Utility fees for the use of billboards 0 0 0

71444 Fire protection funds 1.507 1.200 0

71451 Motor vehicles taxes, fees and charges 68.147 73.468 76.925

71454 Fees for use of resources of common interest 14.630 20.832 25.988

71455 Tourist fee 56 62 225

71456 City charges 346.945 365.131 331.651

71457 City utility fee 2 0 242

716 Other taxes 40.572 68.699 76.459

71611 Utility company fee 40.572 68.699 76.459

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Classification Description Execution 2009 Execution 2010 Execution 2011

73 Donations and transfers 346.746 402.328 432.469

732 Capital donations from international orga-nizations 13.952 11.494 19.178

733 Current transfers from other governmental levels 332.794 390.834 413.291

74 Other revenues 711.366 629.720 700.054

741 Revenues from property 438.873 403.028 388.791

74114 Interest 59.525 44.855 71.238

74151 Fee for use of natural resources 491 468 544

74152 Use of forests and agricultural land fee 136.057 73.004 77.906

74153 Construction land use fee 242.799 284.701 239.103

742 Revenue from sale of goods and services а 214.601 178.277 257.592

74214 Revenues from sale of goods and services or lease by market organizations 111.092 73.840 69.920

7422 Fees and charges 90.783 90.584 173.822

7423 Other revenue from sale goods and ser-vices 12.726 13.853 13.849

743 Fines and confiscated assets 1.550 13.826 12.961

744 Voluntary transfers from natural and legal entities 15.765 17.990 15.865

745 Mixed and unspecified revenue 40.577 16.599 24.845

77 Memorandum items for reimbursement of expenses 1.034 32 106

8,9,3 PROCEEDS 138.452 172.117 152.807

8 Proceeds from sale of nonfinancial assets 4.975 8.452 4.300

813 Proceeds from sale of fixed assets 4.975 8.452 4.300

9 Proceeds from borrowing and sale of finan-cial assets 133.477 163.665 148.507

911 Proceeds from borrowing 65.478 142.394 136.469

921 Proceeds from sale of financial assets 67.999 21.271 12.038

3 SURPLUS FROM PREVIOUS YEARS 441.551 329.269 440.584

32 Unspent funds from previous years 441.551 329.269 440.584

TOTAL REVENUE AND PROCEEDS 3.391.273 3.442.060 4.066.632


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From the data on actual budget revenues and proceeds of the City of Pančevo in the period 2009 – 2011, the following can be concluded:

Revenues from taxes recorded a decline in 2009 by 12% due to reduced business activity in •

the Republic of Serbia, increase in unemployment and decline in nominal gross wages, while revenues from taxes in 2010 recorded a growth by 8,9%.Revenues from donations and transfers demonstrated a high volatility in the period 2008 – •

2009 (decline by 40,2% in 2009) due to drastic reduction in general transfers from the budget of the Republic of Serbia to cities in Serbia with the largest fiscal capacity. Revenues from dona-tions and transfers recorded a growth in 2010 by 16%. Proceeds from sale of non-financial assets fluctuate each year depending on market conditions •

for sale of certain City property, and are reused for the maintenance or purchase thereof. During the reporting period the City has borrowed in 2008 in the amount of RSD 259,6 million, •

in 2009 in the amount of RSD 65,6 million and in 2010 in the amount of RSD 142,4 million, while the amount borrowed in 2011 was RSD 136 million.

Table 23. Execution of expenditures and expenses from the City budget, 2009 – 2011 (RSD 000)

Classifi-cation Description Execution 2009 Execution 2010 Execution 2011

I EXPENDITURES 2.667.509 2.670.416 3.041.622


41 Payroll expenditures 733.190 737.033 811.648

42 Use of goods and services 555.690 575.358 771.571

44 Repayment of interest and borrowing costs 35.135 29.129 31.159

45 Subsidies 678.398 764.307 744.008

46 Donations, grants and transfers 443.211 317.882 381.638

47 Social security and social care 118.751 153.436 187.513

48 Other expenditures 103.134 93.271 114.085

II EXPENSES 394.495 331.060 597.862

5 NONFINANCIAL ASSETS EXPENSES 238.310 129.644 372.149

51 Fixed assets 225.231 124.607 355.591

52 Inventory 0 0 0

54 Natural assets 13.079 5.037 16.558

55 Nonfinancial assets from NIP funds 0 0 0

6 DEBT AND FINANCIAL ASSETS EXPENSES 156.185 201.416 225.713

61 Repayment of principal 156.185 201.416 225.713

62 Purchase of financial assets 0 0 0

III TOTAL EXPENDITURES AND EXPENSES 3.062.004 3.001.476 3.639.484


54


Based on data on executed budget expenditures and expenses of the City of Pančevo in the period 2009 – 2011, the following can be concluded:

Expenditures and expenses were executed in accordance with the realization of the budget •

revenues and proceeds. The growth of current expenditures stalled in 2009 with significant reduction in transfers to City •

enterprises (decrease by 29,9% compared to 2008) and maintenance of payroll expenditures at the level from the previous accounting year. Expenditures for purchase of non-financial assets, in the observed accounting period, experi-•

enced a downtrend in the period 2008 – 2010, whereas in 2011 the same increased by 180% primarily because of investing in fixed assets. Expenditures for financial assets and repayment of loans mainly relate to the repayment of •

principle.

Table 24. Execution of City budget for 2009, 2010 and 2011 summative revenues and proceeds (RSD 000)


А REVENUES AND PROCEEDS (7+8) 2.816.245 2.949.126 3.477.542


71 Taxes 1.752.124 1.908.594 2.340.612

73 Donations and transfers 346.746 402.328 432.469

74,77 Other revenues 712.400 629.752 700.162

8 PROCEEDS FROM SALE OF NON-FINANCIAL ASSETS 4.975 8.452 4.299


82 Proceeds from sale of stock - - -

B EXPENDITURES AND EXPENSES (4+5) 2.905.819 2.800.060 3.413.771





45 Subsidies 678.398 764.307 744.008




5 EXPENDITURES FOR NON-FINANCIAL ASSETS 238.310 129.644 372.149

51 Fixed assets 225.231 124.607 355.591

52 Stock 0 0 0

54 Natural assets 13.079 5.037 16.558

NET PURCHASE OF NON-FINANCIAL ASSETS (8-5) (233.335) (121.192) (367.850)

I BUDGET SURPLUS/DEFICIT (A-B) (89.574) 149.066 63.771

55



9,6 ACCOUNT FUNDING (22.708) (37.751) (77.206)




62 Purchase of financial assets 0 0 0

II FISCAL SURPLUS/DEFICIT (I+9-6) (112.282) 111.315 -13.435

3 SURPLUS FROM PREVIOIUS YEARS 441.551 329.269 440.585

III TOTAL SURPLUS/DEFICIT (II+3) 329.269 440.585 427.150


By comparing data on actual revenues and proceeds and expenditures and expenses of the City of Pančevo budget in the period 2009 – 2011 it is evident that:

Expenditures and expenses were executed in accordance with the generated budget revenues •

and proceeds, however, due to an increase in expenditures and expenses in 2009, a budget deficit in the same year amount to RSD 89,6 million. After financing with transferred funds from 2008, the total surplus generated in 2009 amount-•

ed to RSD 329,3 million. Current revenues in 2010 increased by 4,6% compared to 2009, owing to increased revenue •

collection from taxes by 8,9% and increased revenue from donations and transfers by 16,03%. Current expenditures recorded an increase of only 0,1% compared to 2009, whereas the largest •

increase by 29,2% was recorded in the domain of Social insurance and Social security. Expenditures for purchase of non-financial assets in the observed period recorded a total de-•

cline by 46,5%, whereas the total expenditures for fixed assets decreased by 44,68%.

2.3.2. Excerpt from City of Pančevo Annual Balance Sheets for Past Three Years

City Assembly shall by the end of the year for which the budget is passed, adopt the City budget an-nual balance sheet, in accordance with the Budget System Law. City budget and annual balance sheet of the City shall be made available to the public. Pursuant to Article 79 of the Law, annual balance sheet shall be prepared in accordance with the internationally accepted accounting standards and contain the following:

Balance Sheets•

Income statement •

Report on expenditures for purchase of nonfinancial assets and earnings from sale thereof; •

Balance of funding; •

Report on budget execution; •

Explanation of discrepancies between approved and executed funds; •

Report on received donations and borrowing in domestic and foreign cash and capital markets •

and debt repayments; Report on use of funds from current and permanent budget reserves; •

External audit report on financial statements referred to in points 1) – 9); •

Report on output of the programmed budget; •

Detailed report on implementation of program funds and projects funded from the budget; •

Notes on accounting policies and additional analysis. •

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Attached to this document are the City of Pančevo Balance Sheets for 2008, 2009, and 2010, prepared in accordance with the Law. All financial statements within the annual balance sheets were produced as consolidated reports. Consolidation includes 38 indirect budget beneficiaries.

Table 25. Indirect budget beneficiaries subject to consolidation

Name of indirect budget beneficiary No. of beneficiaries

City Attorney General 1

PE “City Housing Agency“ 1

PE “Directorate for Construction and City Planning of Pančevo“ 1

Kindergarten “Dečja radost“ 1

Cultural institutions 17

Local Communities 16

Pančevo Tourist Organization 1

TOTAL 38


Below are excerpts from key financial statements from attached City of Pančevo annual balance sheets for the previous three years.

Table 26. Excerpt from consolidated City Balance Sheet (RSD 000)

Account Description Balance on31.12.2008.

Balance on31.12.2009.


А ASSETS 8.165.768 8.517.893 9.711.331

0 NON-FINANCIAL ASSETS 5.934.968 6.339.583 6.555.671

01 NON-FINANCIAL ASSETS IN FIXED ASSETS 5.929.053 6.333.464 6.549.632

02 NON-FINANCIAL ASSETS IN STOCK 5.915 6.119 6.039

1 FINANCIAL ASSETS 2.230.800 2.178.310 3.155.660

11 LONG-TERM FINANCIAL ASSETS 155.378 144.181 147.025

12 CASH, PRECIOUS METALS, SECURITIES, RECEIVABLES AND SHORT-TERM INVESTMENT 1.099.080 1.257.415 1.869.827

13 ACCRUALS 976.342 776.714 1.138.808

35 OFF BALANCE SHEET ASSESTS 165.039 173.397 122.935

П LIABILITIES 8.165.768 8.517.893 9.711.331

2 LIABILITIES 1.583.202 1.612.575 2.558.670

21 LONG-TERM LIABILITIES 759.660 723.400 722.359

22 SHORT-TERM LIABILITIES 7 3.164

23 PAYROLL EXPENDITURE LIABILITIES 503 2.009 1.670

24 OTHER EXPENDITURE LIABILITIES 24.760 23.048 22.222

25 ACCOUNTS PAYABLE 217.596 94.833 427.712

29 DEFERED EXPENSES 580.676 769.285 1.381.543

57


Account Description Balance on31.12.2008.



3 CAPITAL, DETERMINATION OF BUSINESS PERFORMANCE 6.582.566 6.905.318 7.152.661

31 CAPITAL 6.042.496 6.454.795 6.613.763

32 SURPLUS REVENUE AND EARNINGS – SURPLUS 350.224 381.291 480.800

32 UNDISTRIBUTED SURPLUS REVENUES AND PROCEEDS FROM PREVIOUS YEARS 189.987 71.120 65.052

32 DEFICIT FROM PREVIOUS YEARS 141 1.888 4.034

35 OFF BALANCE SHEET LIABILITIES 165.039 173.397 122.935


Based on data presented in the City of Pančevo balance sheet for provided three years, the following can be concluded:

From 2008 – 2010, the value of total assets of the City increased by RSD 1,5 billion or 18,9%, •

and on 31 December 2010 amounted RSD 9,7 billion. It is necessary to draw attention to the fact that balance sheet did not include all assets used •

by the City due to unsolved property issued with the Republic. There are estimates that the value of total assets of the City will be far greater following the adoption of anticipated laws on restitutions and public property. Capital of the City increased by 9,5% to reach RSD 6,6 billion at the end of 2010. •

Long-term liabilities of the City at the end of 2010 were RSD 722,4 million and relate to capital •

investments loans.

Table 27. Excerpt from consolidated income statement of the City (RSD 000)


Execution 2008

Execution 2009

Execution 2010

А CURRENT REVENUES AND PROCEEDS FROM SALE OF NON-FINANCIAL АSSETS 4.395.475 3.336.101 3.181.282


71 Taxes 1.992.093 1.752.169 1.908.643

72 Social contributions 71

73 Donations and transfers 1.254.670 597.134 403.643

74 Other revenues 1.075.390 889.033 814.368

77 Memorandum items for reimbursement of expenses 4.894 5.174 5.123

78 Transfers between budgetary beneficiaries 2.085 1.782 1.770

79 Budget revenues 38.236 56.785 26.357




58



Execution 2008

Execution 2009

Execution 2010

B Proceeds from sale of stock 4.635.391 3.393.156 3.053.721

4 CURRENT EXPENDITURES AND EXPENSES FOR NON-FINANCIAL ASSETS 3.049.878 2.834.458 2.844.877

41 CURRENT EXPENDITURES 815.921 816.228 820.782



44 Depreciation and use of means for work 39.495 35.225 29.304


46 Subsidies 381.057 299.620 273.497



5 Other expenditures 1.585.513 558.698 208.844

51 EXPENDITURES FOR NON-FINANCIAL ASSETS 1.554.458 543.959 204.836

52 Fixed assets 10.888 1.658 1.970

54 Inventory 20.167 13.081 2.038

55 Natural assets

DETERMINATION OF RESULTS

Surplus of revenues and earnings – budget surplus (А-B) 127.561

Deficit of revenues and earnings – budget deficit (B-А) 239.916 57.055

ADJUSTMENT OF SURPLUS/DEFICIT OF REVENUES AND PROCEEDS 662.794 594.720 554.936

Part of general surplus revenues and proceeds from previous years used for covering expenditures and expenses in the current year

365.952459.530 373.969

Part of depreciation funds used for purchasing non-financial assets 481 181 299

Part of unspent funds carried over from previous years to cover expenditures and expenses in the current year 259.784 67.010 159.397

Amount of revenues from privatization used to cover expen-ditures and expenses in the current year 36.577 67.999 21.271

COVERAGE OF EXPENDITURES FROM CURRENT REVENUES AND PROCEEDS 72.654 156.374 201.617

Expenditures for repayment of liabilities for loans 72.654 156.374 201.417

Expenditures for purchase of financial assets

32 SURPLUS OF REVENUES AND PROCEEDS – SURPLUS 350.224 381.291 480.880

Part of surplus revenues and proceeds specifically committed to next year 310.964 362.538 476.190

General portion of surplus revenues and proceeds for transfer to the next year 39.260 18.753 4.690


59


Income Statements for 2008, 2009, and 2010 reported all revenues and proceeds and expendi-tures and expenses for non-financial assets that were realized between 1 January and 31 December of the given budget year. Subsequent to establishing performance in a given budget year, the statement presents sources of funds for covering generated deficit in revenues and proceeds, or the manner of use of surplus revenues and proceeds. The final statements show the surplus revenues and proceeds to be transferred into the next budget year.

In the 2008 – 2010 period the City of Pančevo generated budget surplus in 2010 in the amount of RSD 127 million, with recorded budget deficit in 2008 and 2009 in the amount of RSD 239 million and RSD 57 million, respectively. The surplus from previous financial years and earnings from privatization resulted at the end of the said accounting years generated surplus in the amount of RSD 350,2 million and RSD 381,3 million, respectively.

Table 28. Excerpt from report on capital expenditures and proceeds of the City (RSD 000)


Execution2008

Execution2009

Execution2010

А PROCEEDS 324.300 168.629 186.002



82 Proceeds from sale of stocks 2.213 2.968 3.411

9 PROCEEDS FROM BORROWING AND SALE OF FINANCIAL ASSETS 296.193 134.676 164.615



B EXPENDITURES 1.658.168 715.072 410.461


51 Fixed assets 1.554.458 543.959 204.836

52 Inventory 10.888 1.658 1.970

54 Natural assets 20.167 13.081 2.038

55 Non-financial assets funded from NIP funds

6 EXPENDITURES FOR REPAYMENT OF PRINCIPAL AND PURCHASE OF FINANCIAL ASSETS 72.655 156.374 201.617


62 Purchase of financial assets 190 200

PROCEEDS DEFICIT (B-A) 1.333.868 546.443 224.459


Income statements for 2008, 2009, and 2010 report all proceeds from sale of assets (non-financial and financial) and borrowing, as well as expenditures for purchasing assets and repayment of principle generated and executed between 1 January and 31 December of the budget year. The statements also report the generated surplus or deficit in proceeds over expenditures at the end of the budget year.

60


Table 29. Excerpt from consolidated cash flow report of the City (RSD 000)


2008Execution

2009Execution

2010

А CASH INFLOW 4.691.668 3.470.777 3.345.897


71 Taxes 1.992.093 1.752.169 1.908.643



74 Other revenues 1.075.390 889.033 814.368



79 Budget revenues 38.236 56.785 26.357



82 Proceeds from sale of stock 2.213 2.968 3.411




B CASH OUTFLOWS 4.708.046 3.549.530 3.255.338






45 Subsidies 847.880 707.122 735.523





51 Fixed assets 1.554.458 543.959 204.836

52 Inventory 10.888 1.658 1.970

54 Natural assets 20.167 13.081 2.038

55 Assets funded from NIP funds 0 0

6 EXPENDITURES FOR REPAYMENT OF PRINCIPAL AND PUR-CHASE OF FINANCIAL ASSETS 72.655 156.374 201.617


61



2008Execution

2009Execution

2010


SURPLUS CASH INFLOW (А-B) 90.559

DEFICIT CASH INFLOW (B-А) 16.378 78.753

C CASH BALANCE, BEGINNING OF YEAR 543.114 534.336 466.386

D CORRECTED INFLOW FOR RECEIVED FUNDS IN THE BAL-ANCE 4.694.652 3.485.407 3.368.174

Correction of cash inflow for funds collected and not record-ed through classes 7, 8 and 9 2.984 14.630 22.277

Е CORRECTED OUTFLOW FOR PAID FUNDS IN THE BALANCE 4.711.017 3.260.448 3.260.448

Correction of cash outflow for the amount of calculated depreciation recorded at the expense of own revenues 1.246 4.393 5.883

Correction of cash outflow for the amount of paid expendi-tures not recorded through classes 4, 5 and 6 4.217 8.220 10.993

CASH BALANCE AT THE END OF YEAR (C+D-E) 526.749 466.386 574.112


Cash Flow Statements for 2008, 2009, and 2010 report all inflows and outflows of cash funds in the consolidated account of the City Treasury, classified according to revenues and proceeds paid between 1 January and 31 December of the budget year. By including cash balance at the year’s beginning and non-recorded inflows and outflows (class of accounts from 4 to 9), the statements determine and pres-ent the cash balance in the consolidated treasury account at the budget year-end. Therefore, the state-ments represent the cash flow consolidation for all sub-accounts within the City of Pančevo Treasury.

Table 30. Excerpt from consolidated reports on City budget execution (RSD 000)


2008Execution

2009Execution

2010

А CURRENT REVENUES AND PROCEEDS FROM SALE OF NON-FINANCIAL ASSETS 4.395.475 3.336.101 3.181.282


71 Taxes 1.992.093 1.752.169 1.908.643



74 Other revenues 1.075.390 889.033 814.368



79 Budget revenues 38.236 56.785 26.357



82 Proceeds from sale of stock 2.213 2.968 3.411

62



2008Execution

2009Execution

2010




B TOTAL REVENUES AND PROCEEDS 4.691.668 3.470.777 3.345.897

C CURRENT EXPENDITURES AND EXPENSES FOR PURCHASE OF NON-FINANCIAL ASSETS 4.635.391 3.393.156 3.053.721






45 Subsidies 847.880 707.122 735.523


47 Social security and social protection 59.213 77.687 99.651



51 Fixed assets 1.554.458 543.959 204.836

52 Inventory 10.888 1.658 1.970

54 Natural assets 20.167 13.081 2.038

55 Assets funded from NIP funds

6 EXPENDITURES FOR REPAYMENT OF PRINCIPAL AND PURCHASE OF FINANCIAL ASSETS 72.655 156.374 201.617



D TOTAL EXPENDITURES AND EXPENSES 4.708.046 3.549.530 3.255.338

BUDGET SURPLUS (А-C) > 0 127.561

BUDGET DEFICIT (C-A) > 0 239.916 57.055

SURPLUS PROCEEDS (9-6) > 0 223.538

SURPLUS CASH INFLOW (B-D) > 0 21.698 37.002

DEFICIT CASH INFLOW (D-B) > 0 90.559

PROCEEDS FROM SALE OF NON-FINANCIAL ASSETS 16.378 78.753


Reports on budget execution for 2008, 2009, and 2010 show planned and generated revenues and proceeds, as well as approved appropriations and executed budget expenditures and expenses of the City and budgetary beneficiaries between 1 January and 31 December of the budget year. Report shows

63


the execution of the Decision on the Budget of the City of Pančevo. It shows the sources of funding of budget and budgetary beneficiaries’ expenditures and expenses; such are revenues and proceeds from: the budget of the Republic, the budget of the City, donations and other sources (for example, budgetary beneficiaries’ own revenues).

These reports are different from the execution of the nonconsolidated budget of the City (illustrated under 2.3.1 City of Pančevo budget for past three years), because next to budget revenues, proceeds, expenditures and expenses they include revenues and proceeds of all budget beneficiaries that are con-solidated under the City of Pančevo.

2.3.3. Relevant Performance Indicators for Previous Three Years

In order to demonstrate successful performance and credit rating of the City, the Report on Execu-tion of the City Budget for budgetary funds was reclassified. That was conducted by regrouping the current revenues and current expenditures from annual financial reports for 2009 - 2011. Reclassified report on budget execution allows special consideration of revenues and expenditures within the cur-rent budget, and especially within the capital budget of the City.

The current budget shows the currents revenues and current expenditures. Current revenues in-clude all original and shared budget revenues of the City as well as current transfers from the Republic of Serbia. Current expenditures are classified according to economic classification as: payroll, social benefits, purchase of goods and services, current transfers, current subsidies to enterprises, paid interest and charges and other current expenditures.

The capital budget shows the capital investments expenditures and means for their funding. Ap-propriations in the capital budget include: non-financial assets expenses, capital transfer to other levels of government and capital subsidies to public enterprises founded by the City. Revenues in the capital budget include: proceeds from sale of non-financial assets and current revenues intended for financing capital investment expenditures (capital transfers from the Republic, self-contributions, construction land development and construction land lease fees and capital donations and transfers).

The following table depicts the execution of the budget in the period 2009 – 2011, with important notice that the data concerning the 2011 budget execution was generated on the basis of avail-able information and projections, as the 2011 annual balance sheet of the City was in preparation at the time of drawing up the Information Memorandum.

Table 31. Reclassified non-consolidated reports on execution of the City budget (RSD 000)

No. Description Execution 2009

Execution2010

Execution2011

А CURRENT REVENUES AND EXPENDITURES

1. CURRENT REVENUES 2.659.389 2.787.769 3.308.286

Property tax 124.326 157.356 165.774

Local charges and fees 471.873 528.291 1.023.431

Shared income tax 1.154.242 1.222.223 1.582.459

Other shared taxes and fees 582.530 528.592 123.868

Current transfers 326.418 351.307 412.754

2. CURRENT EXPENDITURES 2.373.741 2.406.573 2.890.560

Payroll expenditures 733.190 737.033 811.648

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No. Description Execution 2009

Execution2010

Execution2011

Expenditures for goods and services 555.690 575.358 771.571

Payment of interest and fees 35.135 29.129 31.159

Current subsidies 508.391 563.747 646.590

Current transfers and donations 319.450 254.599 327.994

Social insurance and social care 118.751 153.436 187.513

Other current expenditures 103.134 93.271 114.085

3 CURRENT SURPLUS/DEFICIT (1-2) 285.648 381.196 417.726

B CAPITAL REVENUES AND EXPENDITURES

4. CAPITAL REVENUES AND PROCEEDS 156.856 161.358 169.256

Self-contributions

Construction land development and use fees 139.108 109.412 164.418

Capital transfers 6.377 39.527 538

Capital donations 6.396 3.967 0

Proceeds from sale of non-financial assets 4.975 8.452 4.300

5. CAPITAL EXPENDITURES AND EXPENSES 532.079 393.488 523.211

Expenses for purchase of non-financial assets 238.310 129.645 372.149

Capital transfers to other levels of government 123.762 62.597 53.644

Capital subsidies to public companies 170.007 201.246 97.418

6. NET PURCHASE OF NON-FINANCIAL ASSETS (375.223) (232.130) (353.955)

7. BUDGET SURPLUS/DEFICIT (3-6) (89.575) 149.066 63.771

C ACCOUNT FUNDING

Proceeds from sale of financial assets 67.999 21.271 12.038

Proceeds from borrowing 65.478 142.394 136.469

Expenses for purchase of financial assets

Repayment of debt 156.184 201.416 225.713

8. SURPLUS/DEFICIT AFTER FINANCING (112.282) 111.315 (13.435)

D UNSPENT FUNDS FROM PREVIOUS YEARS

Unspent funds from previous years 441.551 329.269 440.585

TOTAL SURPLUS/DEFICIT 329.269 440.584 427.150


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Table 32. Generated surplus in the current budget of the City (RSD 000)

No. Description 2009 2010 2011

1. Total revenues and proceeds (non-consolidated) 2.949.722 3.112.791 3.477.542

2. Current revenues (reclassified) 2.659.389 2.787.769 3.308.286

3. Current surplus 285.648 381.196 417.726

4. Current surplus in total revenues and earnings (3/1) 9,68% 12,25% 12,01

5. Current surplus in current revenues (3/2) 10,74% 13,67% 12,63


Based on reclassified data on City nonconsolidated budget execution it can be concluded that the City of Pančevo in 2009, 2010, and 2011 had a stabile surplus of current revenues over current expen-ditures, which ranged between RSD 78 million and RSD 417 million.

Table 33. Expenditures for long-term debt repayment (RSD 000)


Long-term liabilities

1. Debt liabilities at year beginning 752.255 716.958 720.554

2. Proceeds from borrowing 65.478 142.394 136.469

3. Expenditures for debt repayment 156.184 201.417 225.713

4. EUR exchange rate reduction on 31.12. 55.409 62.619 (7.728)

Debt liabilities at year end (1+2-3+4) 716.958 720.554 623.582

Short-term liabilities for long-term debt

6. Unpaid interest and fees at years beginnings 0 0 0

7. Calculation of interest and fees 34.542 28.177 31.159

8. Payment of interest and fees 34.542 28.177 31.159

9. Interest and fees and years end (6+7-8) 0 0 0


Table 34. Net current surplus in the City budget, after debt repayment (RSD 000)


1. Total revenues and proceeds (non-consolidated) 2.949.722 3.112.791 3.477.542

2. Current revenues (reclassified) 2.659.389 2.787.769 3.308.286

3. Current surplus 285.648 381.196 417.726

4. Expenditures for debt repayment 156.184 201.417 225.713

5. Net current surplus after debt repayment (3-4) 129.464 179.779 191.013

6. Net current surplus in total revenues and earnings (5/1) 4,39% 5,76% 5,49

7. Net current surplus in current revenues (5/2) 4,87% 6,45% 5,77


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Data in the previous table show the amount of net current surplus that remains after servicing debt re-lated liabilities that can be used for financing capital investment expenditures or servicing of a new debt.

Table 35. Managing debt of the City (RSD 000)


DEBT PURSUANT TO THE LAW ON PUBLIC DEBT

1. Current nonconsolidated budget revenues from previous year 3.457.780 2.811.271 2.940.675

2. Debt liabilities at year end 716.958 722.359 633.115

3. Ratio 1: Share of debt liabilities in current revenues (2/1 ≤ 50%) 20,73% 25,70% 21,53%

4. Expenditures for interest and fees 35.135 29.129 31.159

5. Debt repayment 156.184 201.416 225.713

6. Total debt expenditures and expenses (4+5) 191.319 230.545 256.872

7. Ratio 2: Share of debt expenditures and expenses in current revenues (6/1 ≤ 15%) 5,53% 8,20% 8,74%

8. Ratio 3: Two thirds of current surplus/current revenues > 15% 2,77% 6,41% 9,79%

DEBT REPAYMENT FROM CURRENT SURPLUS

9. Current surplus 285.648 381.196 417.726

10. Current surplus before interest (9+4) 178.897 299.388 462.779

11. Ratio 4: Share of debt expenditures and expenses in current surplus (6/10) 59,64% 56,19% 57,22%

12. Net current surplus 129.464 179.780 192.013

13. Ratio 5: Share of debt expenditures and expenses in net current surplus (6/12) 147,78% 128,24% 133,78%


The analysis of conditions stipulated by the Law on Public Debt of the RS clearly shows that the ratio between current revenues and current level of municipal debt is within the framework of the law i.e. the City meets the necessary legal provisions for additional borrowing.

In particular, debt obligations at year-end used to finance capital projects do not exceed 50% of generated current revenues.

Also, the expenditures for debt servicing and payment of principal do not exceed 15% of current revenues, thus it is not required for the City to meet the provision of the Law listed under number 8 in the table above.

The total cost of servicing the existing debt, on average for the observed three years amounts to about 80% of the current surplus plus interest.

Legal parameters indicate that the City is fiscally fit for additional borrowing, which in turn would not produce fiscal instability in the long run.

Based on the above mentioned it can be concluded that the City of Pančevo carefully manages its debt and that the current and new borrowing is intended solely for financing infrastructure projects, and not for covering the budget deficit.

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Table 36. City cash funds management (RSD 000)


CASH BALANCE

1. Cash balance (CTA), beginning of year 534.336 466.386 574.112

2. Total cash inflows 3.485.407 3.368.174

3. Total cash outflows 3.553.357 3.260.448

4. Cash balance (CTA), end of year (1+2-3) 466.386 574.112 581.521

CASH AND INVESTMENT BALANCE (end of year)

1. Consolidated treasury account cash 9.209 6.185 10.232

2. Investments with banks 457.177 567.927 571.290

Overnight deposit 240.177 300.927 315.000

On sight deposit

Term deposit 217.000 267.000 256.290

3. Investment in short-term securities

MF treasury bills

NBS bills

4. Total cash and investments (1+2+3) 466.386 574.112 581.521


2.3.4. Labor Costs

Table 37. City budget payroll expenditures (RSD 000)

Description Execution 2009

Execution 2010

Execution 2011

TOTAL NUMBER OF EMPLOYEES 1.048 1.039 1.041

Direct budget beneficiaries’ employees 318 312 322

Indirect budget beneficiaries’ employees 730 727 719

1. EXPENDITURES FOR GROSS WAGES 514.088 517.717 563.209

2. Current revenues from the reclassified budget 2.659.389 2.787.769 3.308.286

Share of expenditures for gross wages in current revenues (1/2) 19.33% 18.57% 17,02


From the table presented above can be concluded that in the observed accounting period expen-ditures for gross wages of employees of direct and indirect budget beneficiaries followed the current revenues.

Their share in the observed period amounted to an average of 18.30% of current revenues in the reclassified budget.

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3. DEVELOPMENT POLICY OF THE ISSUER

3.1. Budget Projection for the Upcoming Years, Based on the Memorandum of the RS

The basis for planning budget revenues and proceeds and expenditures and expenses of the City of Pančevo for the next three fiscal years is found in the Memorandum on the Budget and Economic and Fiscal Policy for 2011, with Projections for 2012 and 2013, adopted by the Government of the Republic of Serbia.

The following is the depiction of the budget projections for the period 2012 – 2016 with important notice that the data concerning the 2011 budget execution was generated on the basis of avail-able information and projections, as the 2011 annual balance sheet of the City was in preparation at the time of drawing up the Information Memorandum.

Table 38. Projection of the City of Pančevo budget proceeds and expenses, 2012 - 2016 (RSD)

Ac-count Description 2012 2013 2014 2015 2016

321 Determination of business results 427.149.352

7 CURRENT REVENUES 4.156.555.892 4.334.916.461 4.534.505.180 4.730.079.983 4.934.116.536

711 Taxes on income, profit and capital gains 2.284.925.442 2.387.747.087 2.495.195.706 2.607.479.513 2.724.816.091

713 Property tax 247.899.328 269.416.990 292.802.384 304.514.480 316.695.059

714 Tax on goods and services 440.235.970 457.845.409 476.159.225 495.205.594 515.013.818

716 Other taxes 76.850.049 79.924.051 83.121.013 86.445.854 89.903.688

732 Donations 12.020.935 0 0 0 0

733 Transfers from other levels of gov-ernment 314.757.946 328.922.054 343.723.546 359.191.106 375.354.705

741 Revenue from assets 452.463.946 470.562.504 489.385.004 508.960.404 529.318.820

742 Revenue from sale of goods and services 287.729.566 299.238.749 311.208.299 323.656.631 336.602.896

743 Fees and confiscated assets 13.716.982 14.265.661 14.836.288 15.429.739 16.046.929

744 Voluntary transfers from natural and legal entities 0 0 0 0 0

745 Mixed and unspecified revenues 25.955.728 26.993.957 28.073.715 29.196.664 30.364.531

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Ac-count Description 2012 2013 2014 2015 2016

8 and 9 PROCEEDS 278.639.735 296.501.700 203.000.000 2.000.000 2.000.000

813 Proceeds from sale of fixed assets 3.888.646 3.501.700 3.000.000 2.000.000 2.000.000

911 Proceeds from domestic borrowing 274.751.089 293.000.000 200.000.000 0 0

921 Proceeds from sale of domestic financial assets 0 0 0 0 0

TOTAL REVENUES AND PROCEEDS 4.862.344.979 4.631.418.161 4.737.505.180 4.732.079.983 4.936.116.536

4 CURRENT EXPENDITURES 3.473.164.164 3.595.040.989 3.743.886.189 3.737.176.490 3.892.868.023

41 Payroll expenditures 876.389.344 920.208.811 975.421.340 1.033.946.620 1.095.983.417

42 Use of goods and services 1.041.893.813 1.069.326.115 1.104.977.435 1.124.509.033 1.169.489.394

44 Payment of interest and associated costs of borrowing 60.546.108 52.556.008 48.419.357 36.755.677 23.910.538

45 Subsidies 627.128.674 651.580.818 677.644.051 579.650.034 597.385.118

46 Donations, grants and transfers 476.550.812 495.087.607 514.891.111 530.963.829 557.494.206

47 Social insurance and social security 254.549.550 264.731.532 275.320.793 280.827.209 292.060.298

48 Other expenditures 119.105.863 123.870.098 128.824.902 131.401.400 136.657.456

49 Payroll expenditures 17.000.000 17.680.000 18.387.200 19.122.688 19.887.596

5 EXPENSES FOR NON-FINANCIAL ASSETS 1.081.366.393 739.044.538 721.202.415 723.236.682 819.214.009

51 Fixed assets 1.080.626.393 726.240.306 707.286.776 707.286.776 808.181.651

52 Equipment and inventory 0 12.000.000 13.041.600 15.000.000 10.000.000

54 Natural assets 740.000 804.232 874.039 949.906 1.032.358

55 Non-financial assets from NIP funds 0 0 0 0 0

6 DEBT AND FINANCIAL ASSETS EXPENSES 307.814.422 297.332.634 272.416.576 271.666.811 224.034.504

61 Repayment of principal 307.814.422 297.332.634 272.416.576 271.666.811 224.034.504

62 Purchase of financial assets 0 0 0 0 0

TOTAL EXPENDITURES AND EXPENSES 4.862.344.979 4.631.418.161 4.737.505.180 4.732.079.983 4.936.116.536


Table 39. Projection of the City budget cash flow and indebtedness (RSD)

No. DESCRIPTION

EXECU-TION

EXECU-TION PROJECTION

2010 2011 2012 2010 2011

1. CURRENT REVENUES (w/o revenue from interest) 2.895.820.544 3.419.900.616 4.094.477.839 4.270.355.285 4.467.361.557 4.660.250.616 4.861.493.994

2. Revenue from interest 44.854.882 53.342.209 62.078.053 64.561.176 67.143.623 69.829.367 72.622.542

3. CURRENT EXPENDITURES (w/o interest exp) 2.641.286.994 3.010.463.873 3.412.618.056 3.542.484.981 3.695.466.832 3.700.420.813 3.868.957.485

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No. DESCRIPTION

EXECU-TION

EXECU-TION PROJECTION

2010 2011 2012 2010 2011

4. Interest and charges 29.128.980 31.158.861 60.546.108 52.556.008 48.419.357 36.755.677 23.910.538

5. CURRENT SURPLUS/DEFICIT (1+2-3-4) 270.259.452 431.620.091 683.391.728 739.875.472 790.618.991 992.903.494 1.041.248.513

6. CAPITAL EXPENDITURES 8.451.712 4.299.617 3.888.646 3.501.700 3.000.000 2.000.000 2.000.000

7. CAPITAL REVENUES 129.644.423 372.148.875 1.081.366.393 739.044.538 721.202.415 723.236.682 819.214.009

8. BUDGET SURPLUS/DEFICIT (5+6-7) 149.066.741 63.770.833 -394.086.019 4.332.634 72.416.576 271.666.812 224.034.504

9. Proceeds from sale of finan-cial assets 21.270.616 12.038.305 0 0 0 0 0

10. Proceeds from borrowing 142.394.381 136.468.914 274.751.089 293.000.000 200.000.000 0 0

11. Expenditures for purchase of financial assets 0 0 0 0 0 0 0

12. Debt repayment 201.416.448 225.713.234 307.814.422 297.332.634 272.416.576 271.666.811 224.034.504

13. SURPLUS/DEFICIT AFTER FINANCING (8+9+10-11-12) 111.315.290 -13.435.182 -427.149.352 0 0 0 0

14. Surplus from previous years 329.269.244 440.584.534 427.149.352 0 0 0 0

15. TOTAL SURPLUS/DEFICIT (13+14) 440.584.534 427.149.352 0 0 0 0 0

SOLVENCY RATIOS

16. Current revenues in past year from nonconsolidated budget 2.811.270.831 2.940.675.426 3.473.242.825 4.156.555.892 4.334.916.461 4.534.505.180 4.730.079.983

17. Debt liabilities, end year 722.359.000 633.114.680 600.051.347 595.718.713 523.302.137 251.635.326 27.600.822

Ratio 1: share of debt liabili-ties in current revenues (17/16 ≤ 50%)

25,70% 21,53% 17,28% 14,33% 12,07% 5,55% 0,58%

18. Total debt expenditures and expenses 230.545.428 256.872.095 368.360.530 349.888.642 320.835.933 308.422.488 247.945.042

Ratio 2: share of debt expen-ditures and expenses in cur-rent revenues (18/16 ≤ 15%)

8,20% 8,74% 10,61% 8,42% 7,40% 6,80% 5,24%

19. Current surplus, before pay-ment of interest (1+2-3) 2.911.546.446 3.442.083.964 4.096.009.784 4.282.360.453 4.486.085.823 4.693.324.306 4.910.205.998

Ratio 3: share of debt expen-ditures and expenses in cur-rent surplus (18/19)

7,92% 7,46% 8,99% 8,17% 7,15% 6,57% 5,05%


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3.2. Capital Investment Plan for the Period 2009 – 2012

Capital investment plan is a document jointly prepared by the Department for Local Economic De-velopment and Strategic Planning, and representatives of the local administration, budget beneficiaries, public enterprises and other social life entities.

As a management instrument at the local level, the Investment plan directs and supports economic development, increases efficiency in using resources, public accountability, and ensures rationality in setting priorities. It represents a basis for participation in domestic and foreign development funds through projects, directs attention to large and expensive projects and establishes the continuity of investment.

This document improves and affects private investment and institutes private and public partner-ship. In absence of planning, investments tend to be fragmented, chaotic and irrational, decisions tend to be voluntary and rarely based on public interest and priorities, and the local community tends to be unprepared for the use of grants and loans from development funds.

Environments that operate without a plan often experience funding of lower priority projects thus im-pairing the development and the quality of life in accordance with their needs and existing resources.

The investment plan of the City of Pančevo is a medium-term 4-year plan intended for catering to the greater priority interests and needs of the city. It is a public document of general interest harmo-nized with the development objectives of the local community.

The central part of this document is the plan of priority investments (projects) according to areas and years of implementation, with defined drivers, mechanisms and sources of financing, the estimated value and preparation activities.

In order to standardize individual investment plans, and have easier comparison and processing of data, the unique methodology, procedure and manner adopted by the City Council was employed.

The Plan includes all potential types of investments: Infrastructure•

Public buildings•

Equipment•

Purchase of land•

City Council members were the bearers of coordination activities in developing the investment plan according to different areas, thus achieving the efficiency and accountability in the process.

The Plan can be reviewed and revised each year in accordance with new needs and priorities. Since it was impossible to include in the 4-year plan all needs and issues identified in the initial

phase of analysis, the option to include the necessary ones in the Individual Investment plan as adjust-ments “on the go” remains, as well as possibility that some planned investments will not realize if the impending situation in the country or at the local level is not favorable in that sense.

The Investment Plan of the City of Pančevo is shown by the following areas: Economy1) Development of settlements2) Utility infrastructure3) Health and social policy4) Education5) Culture and information6)

73


Detailed information on the capital investments plan can be found on the web-site of the City of Pančevo: http://www.pancevo.rs/Strategije_razvoja-39-1

The following is the abbreviated overview of projects included in the capital in-vestment plan that will be funded from the following: budget revenues, donations, loans and other funds.

Table 40. Table of capital projects and investments in Pančevo, 2011 – 2012

Rank Institution / enterprise

The name and the es-timated value of the

investment (project) in dinars

Sources of funding Implementers Preparatory activities

Implemen-tation

Plan of Priority Investments - ECONOMY

1.

PE “Director-ate for Con-

struction and City Planning of Pančevo”

Building infrastructure for the “Jabučki put”

working zoneEstimated value: upon completion of project

documentation

Domestic and foreign develop-ment funds, City

budget

PE “Directorate for Construction and City Planning

of Pančevo”

Preparing project and planning

documentation, selecting con-

tractors

From 2009 in phases

2.



Building infrastructure for the “Old Utva Air-

port” working zone

Domestic and for-eign development

funds


of Pančevo”

Preparing project and planning

documentation, selecting con-

tractors

2012

3.



Gasification of Pančevo

NIP, Capital In-vestments Fund,

APV, Pančevo City Budget, donations


of Pančevo”

Selecting con-tractors 2009-2012

Plan of Priority Investments – DISTRICT HEATING SYSTEM

1. PUC “Grejan-je” Pančevo

Completion of strategic direction of the hot

water pipeline for con-necting new users in the

length of 4 km RSD 99.440.000

Own funds, City budget, Capital

Investments Fund, Funds for improv-

ing energy effi-ciency

PUC “Grejanje” Pančevo

Preparing main projects for spe-cific directions,

while documen-tation for some directions is al-ready in place

2009-2012In each over-haul season


Building capacities and a system for alternative fuel supply in an event of emergency situation

in natural gas supply and depreciation of peak consumption of natural

gas. RSD 36.000.000


Investment Fund.


Need for devel-opment of major

projects2010-2012


Construction of own gas transportation system

supplying natural gas to provide a better strate-gic position and better economic conditions of

supply. RSD 201.000.000


Investment Fund.


Need for devel-opment of major

projects2010-2012

74






Implemen-tation

Plan of Priority Investments – WASTE MANAGEMENT

1. PUC “Higi-jena”

Construction of the II b phase of the new city

landfill RSD 160.000.000

City budget PUC “Higijena” Project in place 2010/2012

2. PUC “Higi-jena”

Construction of facilities and infrastructure of the centre for collecting and

sorting waste EUR 400.000 ЕУР for building waste sorting

facility (EUR 1.2 million worth of equipment

donated by the Republic of Italy).


funds, City budget

PUC “Higijena” Pančevo

Project and tech-nical documenta-

tion in place2011

Plan of Priority Investments – SPORTS AND RECREATION

1.



Construction of the bicycle path Pančevo – Ivanov to the Danube

(25km). RSD 160.000.000

NIP, CIF АOV, City budget, donations


of Pančevo”

Preparation of a study, projects and selection of

contractors

2009-2011 in phases

2. PUC “Mla-dost”

Construction of an indoor swimming pool

RSD 300.000.000

City budget, NIP, CIF, APV

City of Pančevo, PUC “Mladost”

Project prepara-tion and selecting

contractors.2010

Plan of Priority Investments – PUBLIC GREEN

1. PUC “Zele-nilo”

Covering the Green mar-ket and the Commodity

market Airport RSD 80.000.000

City budget PUC ’’Zelenilo’’

PUC “Zelenilo” Pančevo

Preparing project documentation

2009-2012 in phases

2. PUC “Zele-nilo”

Construction of the public park “Barutana”

RSD 100.000.000


funds, City budget

PUC “Zelenilo” Pančevo


tion in place2011-2014

Plan of Priority Investments – HOUSING

1. PE “City Hous-ing Agency”

Available housing (16 +Х housing units) RSD

34.653.100Own funds PE “City Housing

Agency”2009-2012

in phases

2. PE “City Hous-ing Agency”

Social housing (25 hous-ing units)

RSD 35.000.000 City budget PE “City Housing

Agency”2009-2012

in phases

Plan of Priority Investments – ROAD INFRASTRUCTURE

1.



Construction of exten-sion and reconstruction of the “Old City Core”Water supply and sew-

age system Rainwater sewage

Traffic route with park-ing lots

Public lightingEstimated value: RSD

220.000.000

NIP, Capital in-vestment fund,

APV, Pančevo City Budget, donations


of Pančevo”PUC „Water Sup-ply and Sewage “

Selecting con-tractors 2009-2012

75






Implemen-tation

2.



Construction and recon-struction of streets RSD

900.000.000

NIP, Capital in-vestments fund,

APV, Pančevo City Budget, donations ,


of Pančevo”PUC „Water Sup-ply and Sewage “

2009-2012

3.



Reconstruction of the old city core

RSD 300.000.000

Domestic and foreign develop-ment funds, City

budget


of Pančevo”


tion in place2011-2013

Plan of Priority Investments – EDUCATION

1.

“4th October” elementary school, Gl-

ogonj

Building school gymRSD 39.000.000 City budget


of Pančevo”“4th October” el-ementary school,

Glogonj

Tender and proj-ect documenta-tion preparation

underway

2011

2. Kindergarten “Dečja radost”

KINDERGARTEN at the shooting range

Design and construction of the kindergarten at

the shooting rangeRSD 138.000.000

City budget


of Pančevo”

Preparation of documentation about the loca-

tion, preparation of project docu-mentation and construction

2009-2012 in phases

3. Kindergarten “Dečja radost”

KINDERGARTEN in the Tesla settlement

Reconstruction and annex

RSD 50.000.000

City budget


of Pančevo”

Preparation of documentation about the loca-

tion, preparation of project docu-mentation and construction

2009-2012 in phases


3.3. Description and Implementation Plan for Projects Funded by Bond Issue

The City plans to finance five capital investment expenditures with the issuance of municipal bonds in the amount of RSD 600.000.000 as follows:

1. Construction of the Olympic pool

Project of construction of the city pool is primarily intended to raise the quality of life of citizens, which has a direct impact on raising productivity and creating favorable and attractive living conditions that can prevent the constant migration of younger population to larger cities in the Republic of Serbia.

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Table 41. Pool construction project objectives

PROJECT OBJECTIVES

1. Planning construction of sports facility of particular importance for the development of sport in the Republic of Serbia based on general national interest;

2. Providing modern and functionally constructed and maintained sports infrastructure;

3. Providing equitable regional representation, equitable conditions for training, participation and achievement of results in water sports among all ages;

4. Providing opportunities for implementation of activities and programs in sports organization;

5. Improvement and massification of water sports;

6. Strengthening sports ethics and the spirit of sport;

7. Providing conditions for international cooperation in sport;

8. Providing conditions for organizing and holding sports swimming competitions;

9. Improving the opportunities for education, social orientation of sport and health among school population and different age groups in the Republic of Serbia;

10. Increasing the number of sports teams in the Republic of Serbia;

11. Building new sports facility that meets international standards and suits the needs for development of sport in the Republic of Serbia.


Conducted analysis of planned and realized capital projects indicates a large amount of indirect profit the City budget would have by implementing such projects.

Basic characteristics of the project:Functional organization of the facility enables independent use of several different modes that 1) coexist well together freely and individually in relation to each other:

Swimming section•

Spa•

Fitness centre•

Health unit – option for citizens who do not use the pool to use it •

Commercial space on the ground floor – bars and cafes •

Meeting rooms upstairs – possibility of organizing celebrations, meeting, seminars and the like. •

Concerning the pool area representing the main activity in the complex, all recommendations 2) obtained directly from FINA and Mr. Joaquin Pujo, architect and the leading world expert for pools, board member of the Spanish Swimming Federation and president of the Commission for FINA facilities and infrastructure, were taken into consideration. Recommendations were regarding the distances surrounding the pool, the height of the room where the pool is located, the depth, dressing room facilities, exit roads to the pool and similar. All other competitive Olympic swimming pools in the ex-SFRY, except Kantrida pool in Rijeka have some deficiencies in this sense, however are used regardless since no country have adopted relevant regulation. FINA Rules for competition are under the direct influence of Mr. Pujo. Once completed, the swimming pool in Pančevo will meet all the set forth conditions and be able to organize the World FIN and LEN European Championships. Using the experiences from other facilities, the determination is to insert a drawbridge in the large pool 3) and enable the use of the pool in a greater extent in different modes. In the 51,2 x 25 pool with the drawbridge depth of 2,00 and 25 x 12 pool with depth of 1,20 it is possible to have a water polo club practice, swim practice and non-swimmers school at the same time, or have it be used partially for club practice and partially be open for public which is the most common and the most economical case.

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Figure 11. Olympic pool complex


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The audience is properly organized and entrance and exit routes for both the audience and 4) competitors are completely separate, and all safety regulations not defined in Serbia, however defined pursuant to EU norms and FINA recommendations are met. In terms of energy efficiency and thermal properties of the facility, the Olympic size pool in 5) Pančevo can be classified as passive facility, and the first of its kind sporting facility in Serbia. The quality of the glass façade, the quantity and quality of thermal insulation in the walls and the roof ensure maximum utilization of all available energy and minimal losses, which all together is a key for the facility of this type that is a huge energy consumer. In terms of installations, the facility is a “smart house” with centrally controlled amenities, and 6) minimum involvement of human factors, therefore reducing errors to a minimum. State of the art thermo-mechanical equipment guarantees maximum effects with minimal 7) energy consumption and operating costs. Based on the experience of other facilities, a compact basement space was provided which is 8) more suitable for isolation from high groundwater, and the financial analysis showed that the difference in prices is insignificant compared to all other possible variations. Basement is designed to allow maximum operating room around expensive equipment, and to 9) enable its servicing, replacement and manipulation with it and around it. The basement below and around the stainless steel pool basin fully justifies its existence and use.

Total planned project cost: RSD 420.500.000

2. Drafting design and technical documentation for infrastructure in “Greenfield 2” industrial zone

Project includes:Drafting design and technical documentation for construction of roads for medium and heavy •

traffic; Drafting design and technical documentation for construction of the overpass; •

Drafting design and technical documentation for construction of pedestrian and bicycle •

routes; Drafting design and technical documentation for construction of water mains; •

Drafting design and technical documentation for construction of sewage system; •

Drafting design and technical documentation for construction of storm sewers; •

Drafting design and technical documentation for construction of public lighting; •

Drafting design and technical documentation for landscaping. •


3. Reconstruction of the Kajmakčalanska street in Pančevo

Project includes:Reconstruction of the road 5 m wide and 937 m long with sidewalks on both sides 1 – 1.5 m •

wide lined with curbs 18/24 and 12/24;Construction of new storm sewers in the length of about 1100 m that flows into a channel “33“.•


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4. Participation in the construction of battlements in military barracks Rastko Nemanjić

Project includes:Reconstruction and modernization of the shooting range in military barracks “Rastko Nemanjić” •

in Pančevo ought to enable redefining of safety conditions and ensure reduction of the current safety zones to a minimum that is required. In this way a larger portion of the city construc-tion land would be released from the construction ban, and the development of economy and entrepreneurship in the currently inactive territory of Pančevo would enabled. Namely, the current shooting range safety zone conditions require a 4500 x 1800 m safety zone, which would following reconstruction be reduced 500 x 350 m. Ministry of Defense, Department for Material Resources, Department of Infrastructure has received a detailed design for works on reconstruction and modernization of the shooting range in the “Rastko Nemanjić” military bar-racks in Pančevo. According to project prices, the estimate and preliminary calculation the total amount of funds required for realization of this investment would amount to RSD 53.450.000. City of Pančevo will in accordance with actual possibilities participate in joint funding of the reconstruction and modernization of the shooting range in the “Rastko Nemanjić” military bar-racks, namely it will contribute a portion of funds, and remain open to possible involvement of own, not negligible expert, infrastructure and logistic resources.


5. Drafting design and technical documentation for infrastructure in north industrial zone

Drafting of an appropriate urban development plan will create preconditions for defining the •

extent of investment required for furnishing industrial zone with necessary infrastructure. Once the traffic corridors are established based on the urban plan, the first step in realization will entail the scrutiny and possible resolution of property issues. The project will be developed once the public property is determined. Provided funds are intended primarily for resolving property issues. If some funds remain, they will be intended for the first phase of drafting the project documentation for traffic and infrastructure systems within the competence of the PE Directorate of Pančevo. The project includes: Works on raising the surface to reach planned and projected dimensions in •

the first phase of infrastructure furnishing.


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Table 42. Tabular display of projects funded from municipal bond issue

Project Amount (RSD)

1 Olympic pool 420.500.000

2 Preparation of project and technical documentation and infrastructure for the “Greenfield 2” industrial zone 94.000.000

3 Reconstruction of the Kajmakčalanska street 57.000.000

4 Participation in construction of battlements in military barracks “Rastko Nemanjić” 20.000.000

5 Drafting design and technical documentation for infrastructure in the north industrial zone. 8.500.000

Total 600.000.000


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4. INFORMATION ON THE LOCAL GOVERNMENT

4.1. City Assembly of Pančevo

City of Pančevo is the territorial unit where citizens exercise local self-government (Pančevo City Administration), which includes Pančevo and nine settlements.

Pančevo City Statutes is the basic legal act adopted by the Pančevo City Assembly, which as the high-est authority passes important decisions such as the budget and balance sheet, the amount of local taxes, development programmes, spatial and urban plans, and other acts regulating activities in Pančevo. Execu-tive bodies of the City are: the Mayor (elected by the Assembly among its members), City Council, pre-sided by the Mayor, and City Administration of Pančevo and the Head of Administration.

Pančevo City Administration in its structure includes:

9 SECRETARIATS:Secretariat for General Administration •

Secretariat for the Affairs of the Assembly, the Mayor and the City Council •

Secretariat for Public Service and Social Affairs •

Secretariat for Finance•

Secretariat for Environmental Protection, Urban Planning, Building and Housing Affairs •

Secretariat for Economy and Economic Development •

Secretariat for Inspections•

Secretariat for determination, control and collection of original proceeds •

Common Affairs Service•

3 АGENCIES:Public Procurement Agency•

Transportation Agency•

Property Agency•

Communal Police and the Office of the Mayor•

The main tasks of these services is to perform professional and administrative tasks for the City and other delegated tasks such as: issuance of building permits, support for economic activities, realization of social rights of citizens, youth care, stimulating activities in the field of health, culture, information, sports and other activities.

City of Pančevo aims to continuously improve the administration and to better meet the needs of its citizens. In accordance with contemporary trends a number of projects aimed at modernization of work were either already implemented or are being implemented at the moment.

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Table 43. City Assembly of Pančevo members’ structure, 2008

Party Number of representatives in the City Assembly

Share in total number of representa-tives in the City Assembly (%)

DP (DS) 27 38,57

DPS (DSS) 14 20

SRP (SRS) 11 15,7

LDP 5 7,14

SPP (SNS) 4 5,71

PUPS 3 4,3

Orange Block Civic Group 2 2,86

NW (NS) 2 2,86

Strong Serbia 1 1,43

The Green of Serbia 1 1,43

TOTAL 70 100


Chart 2. City Assembly members’ structure


The City Assembly shall: Adopt the City Statute and Assembly Rules of Procedure; •

Adopt the City Budget and the Annual Budget Balance Sheet; •

Determine the rate of original revenues of the City, as well as method and criteria for determin-•

ing the amount of local charges and fees; Adopt City development programmes; •

Adopt City Spatial Plan and urban plans and regulate the use of construction land; •

Adopt regulations and other general acts; •

Decide on establishment of services, public enterprises, institutions and other organizations •

and supervise their work, and decide on termination or suspensions thereof in accordance with the law;

City parliament structure

16%

7%

6%4% 3% 3% 1%

20%

39%

1%DP (DS) (39%)

DPS (DSS) (20%)

SRP (SRS) (16%)

LDP (7%)

SPP (SNS) (6%)

PUPS (4%)

Orange Block Civic Group (3%)

NW (NS) (3%)

Strong Serbia (1%)

The Green of Serbia (1%)

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Establish public agencies in accordance with the law; •

Establish bodies, organizations, offices and services to meet the needs of the City, regulate their •

organization and ensure organizational, material and other conditions for their work; Appoint and dismiss managing and supervisory boards, appoint and dismiss managing directors •

of public utility and other public enterprises, institutions, organization and services established by the City; Appoint and dismiss the Assembly President and Deputy Assembly President; appoint and dis-•

miss the Mayor, Deputy Mayor and City Council members; determine the amount of fees for construction land development and use, determine the amount of fees for maintenance of residential buildings it manages; Adopt a document on public borrowing of the City in accordance with the law governing public •

debt and so on. Detailed information on jurisdictions of the City of Pančevo Assembly is found in the City Statute.5

4.2. Executive Bodies of the City of Pančevo

Executive bodies of the City of Pančevo are the Mayor and the City Council.The Mayor shall be responsible for timely submission of data records and documents, when required

by the competent authority of the Republic or the Autonomous Province, which supervise the work of executive bodies of the City and the City Administration.

The City Council shall:Propose the Statute, City budget and other decisions and documents adopted by the Assembly; •

Directly execute and ensure implementation of decisions and other acts of the Assembly; •

Decide on temporary financing when Assembly fails to adopt the City budget before the begin-•

ning of a new fiscal year; Ensure the legality of work; •

Approve tariffs for utility public services of utility enterprises founded by the City and approve •

the tariffs for services of other public enterprises founded by the City; Determine the prices of preschool services; •

Supervise the work of city administrations, annul or abolish city administrations’ acts that are not •

in accordance with the law, Statute or other general act or decision adopted by the Assembly; Decide in the second instance administrative procedure on rights and obligations of citizens, •

enterprises and institutions and other organization concerning administrative matters within the jurisdictions of the City; Ensure execution of delegated authorities concerning rights and obligations of the Republic, or •

the Autonomous Province; Appoint and dismiss city administrations’ heads and their deputies, and decide on their exemption; •

Establish expert and advisory working bodies for certain tasks within own jurisdiction; •

Perform other activities in accordance with the law. •

The Mayor of the City is Vesna Martinović. She was born on 09. March 1970 in Pančevo, Republic of Serbia. She completed the “Jovan Jovanović – Zmaj” primary school in Pančevo, the “Uroš Predić” Grammar School in Pančevo and the Faculty of Law in Belgrade where she graduated from in 1993. She passed the bar exam and the public service exam. She has worked in the District Court of Pančevo, then in the Municipal Administration of the Pančevo municipality in the period 1994 – 1997, and in

5 City of Pančevo Statute

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the Power Distribution Company “Pančevo” in Pančevo in the period 1997 – 2002. From 2002 until 2007 she worked as an attorney when she was appointed a member of the Serbian National Assembly. Following parliamentary elections held on 11 May 2008, she was re-elected as member of the National Assembly of the Republic of Serbia, however right after being appointed as Mayor of Pančevo, she returned the mandate. She is member of the Democratic Party since 20 February 2000. She was a member of the Municipal Party Committee in Pančevo on four occasions, and is now the president of the City Party Committee in Pančevo. She is a member of the Statutory Commission and the compe-tent Committee on Legal Affairs and the Women’s Forum of the Democratic Party.

Deputy Mayor is Božidar Baroš. He was born in 1961. He completed the “Žarko Zrenjanin” primary school in Banatsko Novo Selo, High School for Chemistry in Pančevo, and graduated from the Faculty of Agriculture at the University of Belgrade and thus acquired the BS in Agricultural Engineering for the protection of plants and food products. He has since 1993 onwards worked as a private entrepreneur, the owner of the agricultural pharmacies in Banatsko Novo Selo and Kačarevo. He is the president of the BC “BNS” from Banatsko Novo Selo. Pending the entry into office, he was a member of the Council of the Banatsko Novo Selo local community. He is the founder of the local committee of the Demo-cratic Party of Serbia in Banatsko Novo Selo. He is married with two children.

The City Council members are:Tanja Lukić – City Council member responsible for labour and employment affairs 1) Vladimir Mitrović – City Council member responsible for the economy, private entrepreneurship 2) and investments Zoran Jovanović – City Council member responsible for finance 3) Nikola Damnjanović – City Council member responsible for youth and sports 4) Nada Berkuljan – City Council member responsible for culture and information 5) Dr Novica Đorđević – City Council member responsible for health and social policy 6) Miladin Šakić – City Council member responsible for infrastructure and transport7) Vladimir Delja – City Council member responsible for environmental protection, urban and 8) spatial planningPredrag Škaljak – City Council member responsible for education 9) Jelenka Novaković – City Council member responsible for the development of rural areas, 10) agricutlrue and waterpower engineering Srđan Josimov – City Council member responsible for utilities 11) Nataša Andrejević – City Council Secretary. 12)

4.3. Jurisdiction over Borrowing of the City of Pančevo

Legal framework for borrowing of the City of Pančevo shall be regulated under the Law on Public Debt and the City Statute.

The law regulates the right to long-term borrowing of the City to fund or refinance capital invest-ment expenditures envisaged in the City budget.

The City may borrow in the country or abroad, in domestic or foreign currency, in accordance with the Law. It can borrow by taking a loan or issuing securities, provided that the Republic of Serbia and financial institutions may only purchase such securities.

Decision on borrowing of the City of Pančevo shall be adopted by the City Assembly, following previ-ously obtained opinion of the Ministry of Finance, pursuant to the Law and the Statute.

The competent ministry shall provide an opinion within 15 days from the day of sumbitting a re-quest for an opinon. Should the Ministry fail to proived the opinion concerning the request of the City in the aforesaid timeframe, it shall be considered as the opinion was issued.

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When borrowing, the City must manage the debt in accordance with the law, so that: Amount of outstanding debt for capital investment expenditures does not exceed 50% of the •

total generated current budget revenues of the City in the past year; Amount of principal and interest maturing each year for all outstanding long-term borrowing •

for financing capital investment expenditures does not exceed 15% of total generated current budget revenues of the City in the past year.

The City may deviate from these limits in accordance with the Law, under following conditions: Amount of outstanding long-term borrowing for capital investment expenditures may exceed •

50% of total generated budget revenues of the City in the past year, when it comes to loan with a repayment term, excluding the grace period, of at least five years. For long-term loan from the previous paragraph, the amount of principal and interst maturing •

each year for all outstanding long-term loans may exceed 15% if two thirds of the current sur-plus in relation to the total current revenue generated represents a share greater than 15%.

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Notes

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Notes

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Notes

CITY OF PANČEVO2-4 Trg Kralja Petra I, 26000 PančevoPhone +381 13 346 393Fax +381 13 343 222 [email protected] www.pancevo.rs

MUNICIPAL SUPPORT PROGRAMME IPA 2007Good local governance, planning and service delivery

PROJECT FINANCED BYTHE EUROPEAN UNION

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