FINANCING THE DEVELOPMENT OF LOCAL GOVERNMENTS BY MUNICIPAL SECURITIES ISSUING

Financing economic development of the country, regions and municipalities, undoubtedly represent a very complex and complicated area. The complexity is reflected primarily in key decisions, and choosing methods of raising capital and channeling it into specific projects. Theory and practice of different internal and external financing of economic development, and therefore the relevant institutions make adequate decisions on the selection and funding model. Due to the lack of internal resources in almost all countries in transition, related to the domestic borrowing and internal resources, external institutions resort to borrowing. But after borrowing, direction and selection of specific projects at local level to a considerable extent on the political structure and the closeness of local governments with parties in power. The novelty in our economic development financing, primarily contingent on the development of capital markets and security investments, reflected in the projects of local governments. Financial resources provided to local government borrowing and issuing securities, borrowing and only one of the local government and local authorities which significantly allows local communities select the most important projects and financial independence, take responsibility and care for their own environment. In the paper will attempt to explain the advantages and disadvantages of this type of securing funds, what the legislature has done to this type became the dominant and certain restrictions that must be respected in the implementation of investment decisions and debt repayment. This type of fundraising is designed for large investment projects which will enable the use of investment return while filling the budget excludes wear and tear.