On 12 November 2010, the City of Rivne to a critical step forward in modern municipal finance. With the assistance of the Institute of Budget, the City submitted to the Ministry of Finance the set of documents which are required for undertaking a loan from a commercial bank to finance energy saving projects.
The Institute of Budget is responsible for assisting municipalities such as Rivne under the aegis of the Municipal Finance Strengthening Initiative project supported by USAID. The Institute of Budget works with Ukrainian cities that are carrying out infrastructure development investment projects, in particular, in the energy-saving area.
The set of documents comes as a result of the extended cooperation between IBSER and the Rivne City Council. The documents include, among other things, a draft decision on attracting a credit from a commercial bank for financing energy-saving projects at budgetary institutions of the Rivne City Council, which was created with participation of IBSER experts. There is also a justification of this transaction's compliance with regard to the city's ability to discharge its debt obligations in full and on time.
A special feature in attracting this credit is that the Institute of Budget experts worked out a mechanism of attracting municipal budget funds from an international financial organization when according to Article 16 of Ukraine’s Budget Code, foreign borrowing can only be incurred by cities with a population of over 800,000 - only the six largest cities of Ukraine fit this category. Rivne, with its population of 250,000, will in effect be paving the way for modern municipal finance in Ukraine’s mid-sized cities.
Glyanec