Since the global financial crisis,Serbia's public debt has more than doubled. LocalGovernments (LGs) need to find ways to perform moreefficiently, not only to contribute to national fiscalconsolidation efforts, but also because they may have fewerresources available in the future. This report represents acontinuation of the World Bank effort to explore LGsfinances. The first phase of this report focused on optionsfor increases in local revenues; impact of furtherdecentralization; options for reduction of subsidies inselected sectors; and how to control the public debt. Thereport is organized as follows. Chapter 2 examines LG hiringand pay policies. In addition to offering recommendations onhow to achieve efficiency and savings, it sheds light onemployment wage policies within LG enterprises. Chapter 3deepens the analysis of local public utility companies(PUCs), which not only have significant responsibilities fordelivering local services, but also often pose a significantpressure on LG budgets. On average, financial support toPUCs accounts for a quarter of local budgets. This chapterlooks at the main issues and makes recommendations forefficiency gains. Chapter 4 discusses the most importantpublic financial management issues for LGs, asking wherebetter management and accountability could increasevalue-for-money and help extract additional benefits fromcurrent and capital expenditures.It examines budgetpreparation, execution, and reporting issues as a basis forrecommending policies to increase transparency andaccountability as well as more efficient use of resources.Chapter 5 summarizes the main conclusions and policyrecommendations of the report.
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