Enhancing the Performance of Cities and Regional Connectivity in the Western Balkans

January 4, 2017

Photo: Aleksa Aleksic Leka

Urban Partnership Program: As one of the participating cities, Belgrade used a diagnostic tool for financial self-assessment, which has helped the city analyze its own financial position from a new perspective - that of investors and financial institutions.


  • Since 2011, the World Bank and the Government of Austria have supported the Urban Partnership Program, which aims to strengthen the capacity of local governments in the SEE region to improve municipal management practices.
  • City-to-City Dialogues offer peer-to-peer support that is tailored to the local priorities of more than 80 participating cities in the Western Balkans.
  • The Municipal Finance Self-Assessment tool has helped the City of Belgrade to successfully obtain a credit rating from Moody's.

The role of local governments in South East Europe (SEE) has been evolving, along with increased responsibilities, but capacity gaps remain that need to be addressed. Local governments in the Western Balkans face particular challenges from decentralization, a mismatch of revenue and expenditure management, a lack of infrastructure investments, and weak local institutions – all of which are coupled with the need to combat corruption and increase the pace of reforms.

Since 2011, the World Bank and the Government of Austria have supported the Urban Partnership Program, which is aimed at strengthening the capacity of local governments in the SEE region and equipping locally elected officials and city administrators with practical, decision-making tools that can help them effectively manage urban development for inclusive and sustainable growth. 

The Program offers peer-to-peer support for participating cities through "City-to-City (C2C) Dialogues". These are tailored to local priorities and reflect the unique constraints and opportunities each city faces. Such programs are available in Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro, and Serbia. 

Forging City-to-City Connectivity

When the story of C2C Dialogues first began in 2011, municipal practitioners from seven cities came together to discuss and share issues of common interest: from municipal revenues to urban land development; from transparency and accountability to investment programing. 

Since then, eight C2C Dialogues have been organized throughout the SEE region. Today, the Program brings together more than 80 cities. Mayors, municipal department staff, city planners, representatives of central government, national associations of local governments, civil society organizations, and private sector representatives all gather to share workable strategies designed to foster local partnerships and more efficient, self-sufficient, and transparent governance.

The latest dialogue, held in Belgrade on October 24-25, 2016, focused on findings from the Municipal Finance Self-Assessment (MFSA) and Urban Audit, with 15 cities sharing results and success stories.

A Win-Win Collaboration

The City of Belgrade has taken an active part in the Program since 2012, and has successfully applied a MFSA diagnostic tool for financial self-assessment. The city has since received a B1 credit rating, with a positive outlook, from Moody’s credit rating agency. This rating reflects its institutional capacity and revenue raising capability.

“The City of Belgrade had consolidated all of its financial data for the period of five years in one place, including also the city’s future financial prospects and long-term projections,” says Slobodan Milosavljevic, Secretary of Finance for the City of Belgrade, who credits the MFSA in helping this process.

“This way we were ready for the first meeting with Moody’s and we were able to complete the credit rating questionnaire very quickly for the first time.”

Thanks to the MFSA tool the information provided to the agency had, for the most part, already been prepared according to the methodology recognized by the credit rating agency – a fact confirmed by the agency itself.

“The representatives of the City of Belgrade were excellently prepared,” noted Gjorgji Josifov from Moody’s.

“It has been pointed out to us that the MFSA indicators allow the city to check the status of their credit rating at any point in time, and that these indicators are very similar to those applied by the credit rating agencies in assigning credit ratings to cities and local governments.”

The MFSA helped Belgrade analyze its own financial position from a completely new perspective - that of investors and financial institutions. The city used MFSA to demonstrate their creditworthiness and to prepare public-private partnership (PPP) projects.

The City of Rijeka, Croatia also utilized the MFSA to help them identify problems with financial planning, develop a city Strategy, and get a clearer picture on whether the city could afford to participate in European Union projects – helping to prioritize financially sustainable projects.

An urban planner from the Berat Municipality in Albania reported that the Urban Audit process helped his municipality effectively balance three things: the needs, wishes, and opportunities in his community. It also helped in identifying gaps in infrastructure and service provision. The planner then consulted MFSA data to generate a mid-term budgeting plan.

City-to-City Dialogues have been a useful platform for knowledge and experience exchange among the participating cities in the region. In this photo: participants of the C2C event held in October 2016 in Belgrade.

The Road Ahead

The proven success of the C2C Dialogues in bringing the region together around the table to discuss achievements and current issues means the program will continue into the future.

The process has not only helped the participating municipalities analyze their own performance, formulate actionable plans, and acquire external funding for implementation, but it has also helped them take steps to improve their municipal management practices in a transparent manner. Drawing on these tools, the local governments are now better equipped to advocate for policy change within their national frameworks.

Perhaps most fundamentally, however, the C2C journey has helped them set in motion processes that require people from different agencies to work together and pave the way for reform.




"The MFSA tool is very useful and can help LGs assess their financial performance and look for additional financing. On the other hand, it is a huge responsibility to translate the budget into strategies that will drive LG's development",
Reisa Duraj, Head of Finance and Treasure Relations Sector of the Shkoder Municipality, Albania

"This capacity building program will enhance knowledge and skills of local governments, particularly of medium and large cities."

 All testemonials >>>


City to City Dialogue - Cities, Drivers of Economy, Vision 2030
Skopje, April 10-12, 2019.

World Bank-Austria Urban Partnership Program (UPP) held its ninth City to City dialogue and technical workshops organized in collaboration with our regional partner NALAS (Network of Local Government Associations in South East Europe) and the City of Skopje, supported by the Swiss SDC and GIZ. The event took place in Skopje, North Macedonia and hosted over 130 participants from South-East Europe countries and beyond, with central and local government officials and technical practitioners from finance, urban and economic development departments, City Leaders, Local Government Associations, the Network of Associations of Local Authorities of South-East Europe, EC representatives and many other development partners and key stakeholders from the region and beyond.

The underlying theme of the Dialogue - Cities as Drivers of Economic Growth, focused on sustainable local economic development, including local finance, urban planning, accountability, and public participation in improving service delivery to citizens.  The event served as a chance to validate the progress of the WB-Austria Urban Partnership Program and the process of city's self-assessment with SEE participants. The Conference also showcased good practices in city management from Ljubljana, Slovenia and Tirana, Albania, and from other cities in SEE and wider Europe.
The first day of this event included technical sessions on municipal finance, urban planning and land development, urban audit, action planning and implementation, borrowing and creditworthiness and lessons learned from World Bank projects, while the second day conference explored the role of the cities and municipalities in the economic development agenda, enhancements to benefit the citizens of South-East Europe and cities’ learning from best practices.

During the Day 1 opening two sessions, several important topics and questions were raised: where do municipalities stand in terms of local governments finances, planning, land and investments programming and where do they need to go as well as what are the main local level advantages, challenges and opportunities. UPP local experts shared experiences from the test-piloting of MFSA 2.0 online version as well as experiences Urban Audit (UA) implementation. Local experts together with several municipal representatives from Kisela Voda, Bar, Gostivar and Gjirokastër shared their views and suggestions on operation and utilization of the online MFSA tool. Following the general presentation of the improved UA framework, the municipalities of Elbasan, Gostivar and Prilep presented their experiences with the UA tool. They stressed that citizens’ engagement in the decision making by focusing on transparency, accountability and participation in MFSA&UA is highly important.

Participants learned that UPP has high representation in SEE - working and having worked with more than 90 municipalities in the region, including 6 capital cities. That means UPP cities represent an impressive 9% of the regional territory and 22.5% of the regional population. The final conclusion was that to move forward, UPP will need to focus more on support to the CIP and implementation of the Action Plans, including dominant action on revenue collection and budget planning and execution, substantial for expenditure control, internal audits, and transparency improvement.

Throughout the day, participants could hear about ongoing studies and technical assistance programs related to municipal finances in the Western Balkans, as well as several panel discussions showcasing the results and experience of action plan implementation based on the MFSA results and the use of MFSA as a tool to facilitate creditworthiness and borrowing capacity for Local Authorities.

The city of Banja Luka, Bosnia and Hercegovina presented their alignment of MFSA action plan implementation with the strategic documents. The existing MFSA action plan had two goals: (i) financial status improvement and (ii) management. City of Rijeka, Croatia, explained how based on the MFSA results, they recognized the main challenges such as the city's weaknesses in planning due to large deviations from the budget plan's execution by more than 10% (the action plan reduced it to 3%). City of Subotica, Serbia explained that MFSA provided the opportunity to determine the financial position and to plan the finance management reform. The City adopted the Financial Management Plan 2016-2020 and set up the expected results for that period. The city administration defined 7 implementation measures: improvement in capital projects planning, budget planning, revenue collection, and improvement of commitments control and cash management control, increase in debt management capacity, improvement of PIFC and implementation and further development of the internal control and audit function.
Key recommendations from the discussion were to ensure the close co-operation with the central government regarding the introduction of property tax (Rijeka), better co-operation with the state in the preparation and planning of local budget guidelines (Subotica) and the need for greater degree of consistency in city management (Banja Luka).

The Day 1 last session of the workshop was dedicated to sharing experiences on creditworthiness and borrowing capacity. Marjan Nikolov, the UPP local expert explained the three main questions mayors should put about their borrowing capacity: Are we creditworthy? How much can we borrow? How much can we invest in the next 5 years? He argued that the order of these questions is an important indicator on how visionary and goal-oriented a Mayor is. Thus, the MFSA can serve as a helpful tool for the credit rating of LGU-s. Anto Bajo, the UPP local expert, shared that in Croatia no consensus exists on the best methodology and the set of indicators (input variables) to be used for credit risk assessment and that no local units bankruptcy instrument exists, which renders the standard credit risk assessment based on historical behavior of local governments, impossible. Following the discussion, Sasho Trajkov from Gazi Baba Municipality stressed the importance of LGU’s economic growth in the process. The situation in the Municipality of Gazi Baba shows that a well-designed and participatory Urban Audit helped the local economy grow, accordingly increasing the tax base and fiscal income. Marjan Junčaj, from City of Podgorica, shared the experience of the capital city of Montenegro in establishing a local level credit reliability model. He argued that borrowing capacities can be developed through different national and local level scenario analysis.
A final remark by Ms. Farvacque-Vitkovic, stated that along with developing capacities to borrow, LGU’s main focus should be ‘why borrow’. In the end, the discussion on creditworthiness is only relevant, if used as means to a higher end- that of making cities more livable and local economies more sustainable.

Participants could also attend the launch of Better Cities, Better World: A Handbook on Local Government Self-Assessments by Catherine Farvacque-Vitkovic and Mihaly Kopanyi, who are World Bank’s leading senior experts on urban development and municipal finance with extensive working experience in more than 30 countries. Ms. Farvacque-Vitkovic explained that this handbook focuses on key urban issues and helps city leaders and municipal staff to address issues through a solutions package. It provides inspirational ideas and clear-cut methodology for starting and guiding the process and for municipal staff capacity building.



The second day of the conference focused more on the political level discussions and panels, with opening speeches by ministers, mayors and EC representatives. The Mayor of Skopje and newly appointed NALAS President, Mr. Petre Shielgov, opened the conference, followed by speeches by Mr.Suhejl Fazliu, North Macedonia’s Local Government Minister, Mr. Zoran Sapuric, North Macedonia’s Minister tasked with Regulations for Improvement of the Investment Climate for Domestic Companies, Mr. Andrej Zernovski, Foreign Affairs Deputy Minister, Mr. Amer Kapetanovic, RCC Head of Political Department. Last, but not least, the audience could hear a video message from Mr. Johannes Hahn, the European Commissioner for European Neighborhood Policy and Enlargement Negotiations.

Panels presented ongoing regional studies including Western Balkans Urbanization and Territorial Review (WBUTR), financed by the UPP. The WBUTR is a comprehensive analysis of the urban sector in the Region, aiming to inform and support development of integrating urban strategies that increase the impact of sector specific initiatives and enhance the sustainability of urban development (i.e. by fostering regional cooperation, competitiveness, connectivity and economic development). It analyzes urban systems, the economic geography and probable EU accession related development. It also provides actionable recommendations for a faster and more inclusive growth through enhancing competitiveness of leading cities and ensuring national and local access to opportunities in the peripheral and lagging regions. The WBUTR will be published in the Summer 2019.
The highlight of the day was the inspirational story by the Honorable Erion Veliaj, Mayor of Tirana, who spoke of “Cities that should serve the people not the cars” while referring to his great efforts to make Tirana a greener city.

Furthermore, four workshops were organized within the Conference, on the following topics:

1. Smart Cities. Digitalization for LED – during this session, Ms. Jeton Puka from the municipality of Vlorë presented their smart cities experience and chosen strategies and directions 
2. Innovative Strategies and Tools for Planning and Creating Sustainable Cities - TOD and Placemaking => The main objective of the panel was oriented to planning and managing cities for a sustainable development.
3. Sustainable Urban Mobility Planning (SUMP) and Sustainable Energy and Climate Planning (SECAP) - drivers of development and sustainable growth
4. Citizen to Engage in Cities – session presented good practice examples which clearly demonstrated recurring citizen’s participation when they receive feedback and when citizen’s ideas are attended to

The closing remarks of the Conference City to City Dialogue: “Cities as Drivers of Economic Growth – Vision 2030”, were made by Mr.Petre Shilegov and H.E. Mr. Wojciech Jerzy Tyciński, the Ambassador of Poland in North Macedonia.

Cities and municipalities valued the opportunity to participate in another City to City Dialogue which proved to be a successful attempt to summon the Region on a table to discuss achievements, different topics of interest and pressing issues.




Action Planning Rijeka, Banja Luka and Subotica.pdf
Fiscal Capacity Of MGB - S. Trajkov.pdf
Introduction to MFSA Toolkit.pdf
LGSA Handbook.pdf
Local Government Finances, Planning, Land and Investments Programming in SEE - C. Farvacque - Vitkovic.pdf
MFSA and LSG Creditworthiness, Borrowing and Investment Capacity.pdf
Municipal Finance ofWestern Balkans in the context of decentralization.pdf
Municipal Services Improvement Project - Lessons Learned.pdf
Ocjena kreditne sposobnosti - Anto Bajo.pdf
Transparency, Accountability and Participation in MFSA and UA - Sandra Kdolsky.pdf
UPP results survey C2C Dialogues.pdf
Urban Audit framework - Challenges and Results in the Municipality of Elbasan - E. Kenuti.pdf


Parallel Sessions
Parallel sessions - CONCLUSIONS.pdf

Smart Cities - Digitalisation for LED
Rijeka - Smart City.pdf
Smart Cities - Jeton Puka.pdf
Skopje Smart City Strategy - Ognen Marina.pdf

Innovative Strategies and Tools for Planning and Creating Sustainable Cities - TOD and Placemaking
ToD for Sustainable Belgrade Planning 2019 - Skopje.pdf
Sustainable cities Ljubljana – Urban space and sustainable mobility change - Vladimir Babic.pdf
C2C - 100 Villages - Albania.pdf
Sustainable Cities - 100 Villages - Albania - Fiona Mali.pdf
Placemaking-Sarajevo - Zina Ruzdic.pdf

Sustainable Urban Mobility Planning (SUMP) and Sustainable Energy and Climate Planning (SECAP)
GIZ ORF-EE - Dubravka Bosnjak.pdf
Krusevac SUMP - Jelena Brkovic.pdf
Banja Luka - Jelena Pavlovic.pdf
SCTM presentation - Klara Danilovic.pdf
SECAP Prijedor - Boris Srdic.pdf

Citizen to Engage in Cities
C2C Dialogue Session 12 Parallel Session on CE April 11 - Intro.pdf
C2C Dialogue Session 12 Parallel Session on CE April 11 - Transparency in Croatia - Dario Runtic.pdf
C2C Dialogue Session 12 Parallel Session on CE April 11 - Migration and Local Dev - Alexei Gafeli.pdf
C2C Dialogue Session 12 Parallel Session on CE April 11 - Communtity Forums Model - Gorjan Slavkovski.pdf

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