engleski

Financing local public sector in Croatia by issuing municipal bonds

Modern democratic societies are characterised by the tendency of decentralisation and especially the decentralisation of public needs which has to be conveyed to the local level. Therefore, traditional concept of local government financing by tax revenues and governmental transfers are not sufficient to meet growing local public needs. There are several new types of financing local government units with a leading role of issuing municipal bonds. Considering the development of Croatian municipal bond market, there are some macroeconomic prerequisites, as well as additional ones, regarding potentional issuers, that have to be taken into account. Croatia's municipal bond market is at an early stage of development considering the fact that there are only two examples of municipal bond issues: two series of the Istrian County bonds in 1995 and entrance of the Town of Opatija to the capital market. In the focus of our research will be primarily the issue of Istrian County bonds – first series or IŽ 0195 and also the second one, or IŽ 0295. Analysis will be carried out in the terms of the basic elements that determined the municipal bonds issuing project, like the purpose of the issues, the bonds type and their characteristics, secondary trading on the Croatian capital market, redemption etc. As mentioned above, the Croatian experience with municipal securities is limited, but not a negligible one. The aim of this research is to point out that these projects have been of significant importance for the development of Croatia's capital market.

local public sector; municipal bonds; capital market

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