The MLGA is assisting the municipalities by applying the municipal creditworthiness self-assessment tool to enable the assessment of their creditworthy and borrowing capacity as well as to explore and understand the financial situation associated with different scenarios of loans. The analytical tool also provides Macedonian municipalities with the capacity to:

• Collect financial information to self-evaluate their financial balances, and therefore their financial capacity to borrow or issue municipal bonds.
• Forecast revenue and expenditures more accurately.
• Better understand the influences of the revenues and expenditures in the re-current and capital budgets.
• Analyze the factors that may improve the collection of revenues and the efficiency of spending money.
• Monitor and report the accumulation and payment of accounts payable (or short-term debt).
• Simulate different loan scenarios with capacity to modify loan terms and conditions as well as currency type.

The purpose of the municipal creditworthiness self-assessment tool is to summarize and report the financial situation of the local government, using the principles and methodology applied by credit rating agencies to evaluate the creditworthiness of subnational governments based on historical budget trends and forecasted revenue and expenditure scenarios.

Who is Served, Who Benefits, or Who is Affected

Use of this tool can benefit a variety of audiences. Due to the varying degrees of detail in the analytical tables, the information that is synthesized in the financial analysis tool can be useful to each of the following groups:

• Mayors
• City councilmen
• Finance and Budget staff
• Staff responsible for local taxes and fees revenue collection and administration
• Local economic development officers
• Citizens of the municipality
• Rating agencies and commercial banks.

The analyses and the results of the assessment demonstrate how the municipalities can use the financial indicators to establish a creditworthiness baseline and diagnose the risks that will help in determining their capacity to repay a debt obligation.

For More Information
For any further information please contact the MLGA Capital Budgeting and Municipal Credit Team Leader, Gjorgji Josifov at gjosifov@mlga.com.mk