CURRENT ISSUES OF LOCAL SELF-GOVERNMENT FINANCING IN THE REPUBLIC OF SERBIA IN THE PROCESS OF DECENTRALIZATION

Local self-government is an important component of contemporary democratic systems nowadays, as various economic and civil rights are secured within. A significant issue that arises from a fiscal reform process in modern states is to determine an optimal level of decentralization and financial instruments of local self-governments pursuant to the international standards and principles of clarity, justice, efficiency and transparency. In the complex reform process in the Republic of Serbia it is necessary to implement, like in developed countries, modern systems of financing new competences of local self-governments, i.e. to establish proper political, economic and fiscal balance between authorities at different levels. When amending rules and regulations and implementing efficient funding systems of local self-governments in Serbia it is necessary to observe the guidelines of European Charter of Local Self-Government in order to define and implement flexible, dynamic and effective models of managing and funding local self-government in the Republic of Serbia in the process of transition and accession to the EU. It is very important to reach political consensus in long-term on defining optimal reform strategies for local self-government in order to create conditions for developing entrepreneurship, strengthening cooperation with private sector and attracting foreign investments in local self-governments.