Investment and creditworthiness of local self-government

Investment and creditworthiness of local self-government depends on:
• Financial condition, and
• Investment support (guarantee) from higher authorities.
The elimination criterion for the realization of the planned investment is the net current budget deficit, which is
calculates according to the formula:

+ Current budget revenues
- Current budget expenditures
= Current budget surplus / deficit - Debt repayment
= Net current budget surplus / deficit
• Current budget revenues consist of total current revenues excluding self-contributions, capital transfers,
donations, land development fees and one-time land leases.
• Current budget expenditures are total current expenditures excluding capital transfers to other levels
government and capital subsidies to public enterprises.
• According to the Law on Public Debt, the realization of the investment requires the consent of higher levels

Investment and creditworthiness of a public utility company

The investment and creditworthiness of a public utility company depends on:
• Trend in annual income and net profit on the income statement.
• Amounts of capital according to the current balance sheet (the amount of the loan is limited, usually up to
amount of capital).
• Prompt payment obligations.
• Realities of collection of receivables and current assets, ie. whether they can be charged quickly.
• Number of days of account blockages in the last 12 months (positive assessment means max
15 days of continuous blockade, or a total of 30 days).
• Possibilities of obtaining consent and guarantees from the authorities.

Investment and creditworthiness of economic entities

Investment and creditworthiness are assessed by potential co-investors and creditors:
• On the basis of general creditworthiness, ie reputation ("Goodwill"), which gives preference
age of investors, experience, quality of management, possession of intellectual property and
brands (because it presupposes the possibility of realistic prediction).
• Based on trends in the development of business volume, revenue and profit.
• Based on market diversification and position (share) in the present markets.
• Based on the value and attractiveness of the property that can be used for mortgage guarantees.
A positive assessment implies a positive trend in income and net profit on the income statement, a positive trend in net working capital (current assets - short-term liabilities), a positive trend in capital value, correct liquidity in the last 12 months, account blockades max 15 days continuously, or a total of 30 days), the certainty of obtaining disputes (if any) and the loan guarantees offered (if planned), which must usually be at least twice the planned loan. It should also be noted that most financial institutions limit the amount of credit max to the amount of capital on the current balance sheet.

Investment and creditworthiness of a registered farm

The investment and creditworthiness of a registered farm is assessed at

• Values ​​of assets and leased assets.
• Volume of activities and annual revenues.
• Education and experience of household members.
• Farm income and serviceability.
• Farm obligation.
• Inventory values ​​and placement realities.
• Assets eligible for guarantees.

Investment and creditworthiness of a natural person or a beginner in business

Investment and creditworthiness of a natural person is assessed on the basis of:

• Number of family members, expertise, previous work experience, current employment and income.
• Family property.
• Financial condition of the family.
• Available own funds for the planned investment.
• Offered real estate for a guarantee, and the monthly installment of the loan is a maximum of 1/3 of the monthly family income.
In order to prevent risks, potential creditors and co-investors will check the reality of investment capacity through official institutions - agencies:

 • UBS - Association of Serbian Banks - National Credit Bureau (Credit Bureau is a national centralized information system for checking and reporting on the current solvency of individuals and legal entities, which provides insight into the current state of indebtedness of clients).
• APR - Agency for Business Registers (SCORING which classifies investors into classes: A-excellent creditworthiness to E - very weak creditworthiness, with tendencies in the previous three years and compared to the branch of activity, as well as OPINION ON CREDITION which includes detailed financial effects for several previous years),
• NBS - National Bank of Serbia (Search of debtors in forced collection).
• STANDARD & POOR'S, MOODY'S INVESTORS SERVICE AND RATING FITCH: These agencies analyze and provide opinions on the creditworthiness of companies ("corporate rating") and governments ("sovereign rating"). In addition, there are ratings of local governments ("municipal rating"), project ratings ("project rating"). Foreign investors and co-investors also use these reports for small investments when deciding on investments, because they indicate the socio-political and economic environment of the country from the aspect of investment risk.