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LAW ON AMENDMENTS AND ADDENDA TO THE BUDGET SYSTEM LAW Article 1 Article 1 of the Budget System Law (RS Official Gazette, No. 54/09) shall be changed to read as follows: „Article 1 This Law shall regulate the following: planning, drafting, adoption and execution of the Republic of Serbia Budget; planning, drafting, adoption and execution of Autonomous Provinces' and local self-government units' budgets (hereinafter: local governments' budget); drafting and adoption of financial plans of the Republic Pension and Disability Insurance Fund, Republic Institute for Medical Insurance and National Employment Bureau (hereinafter: the organizations for mandatory social insurance); budget accounting and reporting, financial management, control and audit of public resources' users and Republic of Serbia Budget, local governments' budgets and financial plans of organizations for mandatory social insurance; mandate and organization of Treasury Administration, and Ministry of Finance administration bodies (hereinafter: the Treasury) and local governments' treasuries; other issues of importance for budget system functioning. This Law shall regulate the fiscal principles, rules and procedures for fiscal framework, in order to provide for a long-term sustainability of the fiscal policy. This Law shall introduce the Fiscal Council, as an independent body to assess the credibility of fiscal policy from the aspect of the defined fiscal rules' implementation and thus to provide for the public character and accountability in fiscal policy management. Individual provisions of this Law shall regulate budget relations and rules that are applied to extra-budgetary funds, companies and other legal entities in which the State, on all the levels, has a decisive influence on management, and especially on the following: drafting of financial plans, monetary assets' management, loans' taking and issuing of guarantees, accounting, drafting and submission of reports and execution of budget control, which, owing to the sources of financing and control, include the general levels of the State (hereinafter: the extra-budgetary spending units). This Law shall in addition regulate the types and categories of public revenues and proceeds and public expenses and expenditures. “ Article 2 In Article 2, item 3, the following phrase: "The Memorandum on Budget and economic and fiscal policy (hereinafter: the Memorandum)“ shall be replaced by the phrase: "Report on fiscal strategy“. Item 23 shall be amended to read as follows: "23) Budget is an inclusive plan of revenues and proceeds and a plan of expenses and expenditures, the organization of which is divided in two separate accounts: a) account of revenues and proceeds made from the sales of non-financial property and expenses and expenditures for the purchase of non-financial assets and b) account of financing; the Budget is the principal document of the economic policy of the Government;“. -2After the item 25, items 25а to 25l shall be added, which shall read as follows: "25а) Fiscal policy includes decisions reached or activities taken by government bodies in relation to the public revenues and proceeds and expenses and expenditures and accumulation of public assets and liabilities with the aim to influence the economic trends and achievement of fiscal policy targets; 25b) Fiscal policy targets include precise numerical target values of main fiscal aggregate sums that the Government strives to achieve in its Budget; 25c) Anti-cyclical fiscal policy means that the fiscal deficit exceeds target deficit for years when GDP growth rate (hereinafter: the GDP) is lower than potential GDP growth rate, while in the years where the GDP growth rate exceeds the potential GDP growth rate, the fiscal deficit is smaller than its target level and/or a surplus is achieved; 25d) Potential GDP growth rate is the highest growth rate that can be reached over a given period, without any increase in inflation rate; 25e) Fiscal principles are the principles of responsible fiscal management; 25f) Fiscal procedures include drafting, submission and publishing of reports, forecasts, estimates and statements as specified by this Law; 25g) Fiscal risks are the short-term and medium-term variations of fiscal variables against the values envisaged in the Budget, financial and/or other reports or projections of public finances; 25h) Fiscal rules include setting limitations for fiscal policy, in order to improve the budget execution discipline, improve coordination among different levels of public administration and reduce uncertainties about the future fiscal policy; 25i) Fiscal Council is an independent body that is established with the aim to improve the culture of fiscal accountability in the Republic of Serbia, by means of its independent analysis of the fiscal policy and by means of encouraging experts' debates about the fiscal policy; 25j) The Fiscal Strategy Report is the document that brings the Government fiscal policy targets and the assessment of fiscal policy sustainability, which shall be submitted by the Government to the National Assembly; 25k)Fiscal sustainability indicates potential for implementation of a given fiscal policy over a longer period of time, without any significant changes in tax policy or in expenses and expenditures; 25l) Progress Report is an Annex to the Fiscal Strategy Report that contains an inventory of results achieved within the envisaged fiscal policy from the Fiscal Strategy Report which was adopted during the previous fiscal year;“. In item 34, after the word: "credits“, the following words shall be added: "that is, issuing of securities,“. Item 43 shall be deleted. After item 51, items 51а to 51d shall be added, which shall read as follows: "51а) Management responsibility is the responsibility of the top management heading the public fund beneficiaries for the financial, management and program-related tasks and responsibilities that were assigned to them; 51b) Internal financial control in the public sector is an all-inclusive system of management and control measures and for the control of public revenues, expenses, assets and liabilities, which is established by the Government through the public sector organizations with the aim to align the management and control of -3public funds, including the international funds, with the regulations, budget and sound financial management principles, that is, with the principles of efficiency, effectiveness, profitability and openness; 51c) Financial management and control is a system of policies, procedures and activities that is established, maintained and regularly updated by the head of organization, and which provides, by means of risk management, an assurance to a reasonable degree that the that the objectives of the organization will be achieved in an adequate, cost-effective, efficacious and effective manner; 51c) Internal audit is the activity that offers an independent and objective verification and a consultancy activity, with the aim to contribute to the improvement of operating activities of that organization; assists organization to achieve its purposes, by systematic and disciplined assessment and evaluation of risk management, control and management of organization;“. In item 60, the wording: "of the Memorandum“ shall be replaced by the wording: "of the Fiscal Strategy Report". Article 3 A new item 4 shall be added in the Article 5, to follow the item 3, which shall read as follows: "In case that revenues and proceeds, expenses and expenditures, as well as the budget of local governments are budgeted on the pro rata basis, as a percentage of the Republic of Serbia Budget, the amount thereof, that is, the percentage thereof shall be determined by using the revenues and proceeds from the sales of nonfinancial assets as the calculation basis, unless otherwise specified by law.“ Items 4 to 10 shall become items 5 to 11. Article 4 The wording "that are included in the system of consolidated treasury account" in the title above Article 8 shall be deleted. Items 3 to 5 shall be added within the Article 8, which shall read as follows: "The Republic body in charge of the statistics and related tasks shall, in cooperation with the Ministry, draft the list of budgetary and non-budgetary beneficiaries of public funds from the general administration level sector once a year, information on operating activities of which shall be used for the purposes of statistical reporting about the fiscal position, that is, the fiscal policy of the country. The list of entities from the paragraph 3 of this Article shall be drafted based on the internationally recognized standards. The Republic body in charge of the statistical tasks shall define the reporting methods and deadlines for all the entities which have been established to belong to the general administration sector.“ Article 5 Item 10 shall be added within the Article 9, which shall read as follows: "The Minister shall specify the manner of placement of unemployed monetary assets.“ -4Article 6 In Article 14, item 2, the full stop at the end shall be replaced by semicolons and item 4 shall be added, which shall read as follows: "4) Other proceeds prescribed by the Law.“ Article 7 Item 2 in Article 17 shall be deleted. Article 8 Item 7 in Article 19 shall be amended to read as follows: "7) Concession fee;“. Article 9 In item 4 of the Article 20, the word "reserves“ shall be replaced by the wording: "commodity reserves“. The full stop at the end shall be replaced by semicolon and item 7 shall be added to read as follows: "7) Other proceeds specified by law.“ Article 10 Article 21 shall be amended to read as follows: "Article 21 Proceeds from borrowing and sales of financial assets shall comprise of the following: 1) Proceeds from loans taking in the domestic market; 2) Proceeds from loans taking in the international markets; 3) Proceeds from the sales of financial assets in the domestic market; 4) Proceeds from the sales of financial assets in the international market; 5) Other proceeds specified by law.“ Article 11 In Article 22, following paragraph 1, new paragraphs 2, 3 and 4 shall be added to read as follows: "In planning of own revenues from paragraph 1 of this Article, the budget beneficiaries and the beneficiaries of mandatory social insurance funds are obliged to abide by the principle of accuracy in such a manner as to plan their own revenues realistically and to allocate them for use in accordance with the needs. Assets from own revenues, which are as such, pursuant to a special law, used for functioning of administration bodies within the Ministry, and are not allocated by a special act by the Government, shall be used for functioning of the Ministry and administration bodies within the Ministry according to the Program and spending schedule that shall be passed by the relevant Minister. The Program from the paragraph 3 of this Article shall contain, above all, the plan for the use of funds for professional education courses, training and proficiency courses and educational courses of the employees, bonuses for the employees, -5design, building and maintenance of the information system, purchase of equipment for work, construction and purchase of business premises." In the former paragraph 2, which shall become paragraph 5, after the word "Government", the following phrase shall be added: "that is, the relevant executive body of the local government,". After the former paragraph 2, which shall become paragraph 5, paragraph 6 shall be added to read as follows: "The Government, that is, the relevant executive body of the local government may, upon suggestion by the Minister, that is, by the local administration body responsible for finances, reach a decision that a portion of public funds from paragraph 1 of this Article, which were realized in the current year, that is, those that remained unspent from the previous years, shall represent the general budget revenue in the current year." Article 12 In Article 23, item 1 after the sub-item 6, sub-item 7 shall be added to read as follows: "(7) Other tax, in accordance with a special law;“ In item 2, after the sub-item 3, sub-item 4 shall be added to read as follows: "(4) Taxes for special products and activities;“ In item 6, after the sub-item 3, sub-items 3а and 3b shall be added to read as follows: " (for) proceeds from the sales of valuables; (3b) proceeds from the sales of natural resources;“. Article 13 In Article 24, paragraph 1, after item 2, item 2а shall be added to read as follows: "2а) Other tax or a portion of tax pursuant to a special law;“. In item 7 after the sub-item 4, sub-items 4а and 4b shall be added to read as follows: "(4а) Proceeds from the sales of valuables; (4b) Proceeds from the sales of natural resources;“. Article 14 In Article 25, paragraph 1, in item 1 after the sub-item 4, sub-item 5 shall be added to read as follows: " (5) Other tax, pursuant to a special law;“ In item 7, after the sub-item 4, new sub-items 4a and 4b shall be added to read as follows: "(4а) Proceeds from the sales of valuables; (4b) Proceeds from the sales of natural resources;“ -6Article 15 After the Article 27, new Sections IIА and IIB with Articles 27а to 27j and titles above those Articles shall be added to read as follows: „IIa GENERAL FISCAL FRAMEWORK Responsibility Article 27a The Government is responsible for implementation of fiscal policy and for the management of public finances and funds of the Republic of Serbia in accordance with the principles, rules and procedures established by this Law. Local government executive body is responsible for implementation of fiscal policy and management of public property, revenues and proceeds and expenses and expenditures in the manner prescribed by this Law. IIb PRINCIPLES, PROCEDURES AND RULES OF RESPONSIBLE FISCAL MANAGEMENT Fiscal Principles Article 27b General principles of responsible fiscal management are as follows: 1) Accountability principle shall denote that the Government, that is, the local government executive body, are accountable to the National Assembly, that is, to the local government assembly for the execution of their respective mandates in relation to the fiscal policy management; 2) Fairness principle shall denote that the fiscal policy management is implemented by taking into account its impact on the wellbeing of the present and future generations; 3) Responsibility principle shall denote that the management of public assets and liabilities, natural resources and fiscal risks, is implemented in such a manner as to strengthen the fiscal sustainability; 4) Stability principle shall denote that the fiscal policy is implemented in such a manner as not to cause sudden changes in the movements of macro economic and fiscal indicators; 5) Transparency principle shall denote that the tasks and responsibilities of individual state bodies, that is, those of the local government bodies and officials in relation to the fiscal policy management are clearly identified and defined; that updated financial and non-financial information have been provided in relation to the fiscal policy management, and that these are available so that effective public audit of fiscal policy management and public finances state is enabled; that those responsible for publishing of such information do not withhold such information, except in cases where the publishing of such information would incur significant damage to national safety, defence or international relations of the Republic of Serbia. The Government shall identify and implement the fiscal policy targets while guided by the following special principles: 1) Sustainability of the state debt; -72) Regular servicing of the debt; 3) Predictability of tax rates' and tax bases' levels for the following years; 4) Responsible fiscal risks' management; 5) Management of public assets and liabilities, natural resources in the manner that will not generate a burden for the future generations; 6) Stimulating economic growth. Fiscal Strategy Report Article 27c The Government shall submit their fiscal strategy report to the National Assembly each fiscal year. The principal objectives of the Fiscal Strategy Report are as follows: 1) Establishing the Government's short-term and medium-term fiscal policy targets for the period of three consecutive fiscal years, starting from the fiscal year for which the Fiscal Strategy Report is being submitted; 2) Providing a detailed explanation of alignment of the said medium-term targets with the fiscal principles and rules that are established by this Law; 3) Assessment of the fiscal policy impact on the inter-generation allocation of income, and the fiscal policy sustainability study. Procedures in Adoption of Fiscal Strategy Report Article 27d Draft Report on Fiscal Strategy shall be prepared by the Minister and it shall be submitted to the Fiscal Council within the deadline provided in the Budget Calendar. The Fiscal Council shall consider the draft Report and pass their opinion to the Minister. After having obtained the opinion of the Fiscal Council, the Minister shall prepare draft Report on Fiscal Strategy. In case that any recommendation from the Fiscal Council has not been included in the Fiscal Strategy Report, it shall by all means be indicated, together with the reasons for such decision, and the integral version of opinion of the Fiscal Council shall be attached and submitted together with the Fiscal Strategy Report. After having adopted it, the Government shall submit their Fiscal Strategy Report to the National Assembly for further consideration. The National Assembly shall consider the Fiscal Strategy Report, in order to make an assessment on whether the Report has been drafted in accordance with the fiscal principles and rules specified in this Law. The National Assembly shall inform the Government about their comments and recommendations on the Fiscal Strategy Report. In case that the Government, on suggestion by the Minister, decide to make amendments and addenda to the Fiscal Strategy Report based on the recommendations from the National Assembly, such amendments and addenda shall be entered in the revised Fiscal Strategy Report, which shall be delivered to the National Assembly prior to the delivery of draft budget for the following year. -8Content of the Fiscal Strategy Report Article 27e The Fiscal Strategy Report shall contain the following: 1) Medium term projections of macroeconomic aggregates and indicators; 2) Medium term projections of fiscal aggregates and indicators; 3) Objectives and directives for economic and fiscal policy of the Government for the medium term period for which the Fiscal Strategy Report is adopted; 4) Report on taxation policy, including the report tax expenses; 5) Consolidated budget for the general level of the state, as well as the consolidated budgets of the central and local state levels; 6) An overview of priority financing areas; 7) Medium term framework for the Republic of Serbia Budget expenses, including the total expenses per individual budget beneficiaries for the following budget year and for two following budget years; 8) A summary and an analysis of fiscal implications from economic policies and structural reforms; 9) An assessment and a quantification of fiscal risks and potential liabilities; 10) Strategy for the state debt management over the period for which the Fiscal Strategy Report is adopted. The Fiscal Strategy report shall contain the following three mandatory Annexes: 1) Fiscal Council Opinion on draft Fiscal Strategy Report; 2) The National Bank of Serbia Opinion on draft Fiscal Strategy Report; 3) Progress report about the implementation of fiscal policy that is defined in the Fiscal Strategy Report which was adopted in the previous fiscal year. The revised Fiscal Strategy Report shall additionally contain a summary of no specific purpose and specific purpose transfers from the Republic of Serbia budget individually for each local self-government unit. Progress Report Article 27f The Fiscal Strategy Report shall contain, in the form of a mandatory Annex, the Progress Report on the implementation of fiscal policy that is defined in the Fiscal Strategy Report that was adopted in the previous fiscal year. The Progress Report shall contain the following mandatory information: 1) Updated assessment of medium term macroeconomic and fiscal trends and projections contained in the Fiscal Strategy Report that the Progress Report accounts for in detail; 2) A Report section containing the progress assessment against the defined fiscal policy and indicators as specified in the Fiscal Strategy Report that the Progress Report accounts for in detail; 3) A Report section containing the assessment of the fiscal policy results and the measure to which the Government succeeded in applying the fiscal policy -9principles and rules of responsible fiscal management in the previous fiscal year, as specified in this Law; 4) Other information as specified by the Minister. Fiscal Rules Article 27g Fiscal rules pertain to the general state level and these can be general and special rules. The general fiscal rules shall specify the target medium term fiscal deficit and the maximum ratio of debt to GDP with the aim to provide the long term fiscal policy sustainability in the Republic of Serbia. The special fiscal rules shall specify the trends in salaries and pensions, as well as the share of public investments in calculation of fiscal deficits and public expenses over the 2011 - 2015 period. The general fiscal rules are as follows: 1) Target annual fiscal deficit shall amount to GDP 1% in medium term perspective; 2) The general state level debt, excluding the liabilities incurred from restitution, shall not exceed GDP 45%. The fiscal deficit shall be less than targeted or there will be a fiscal surplus in years where the GDP growth rate exceeds potential GDP growth rate, while in years when the growth rate is less than potential the fiscal deficit exceeding the target deficit will be achieved. In order to ensure that the actual medium term fiscal deficit is equal to the target fiscal deficit, and in order to enable the realization of anti-cyclical fiscal policy at the same time, the following formula will be used to determine the fiscal deficit in the year t: dт =dт-1 – а(dт-1-d*)-b(gт-g*) Where dт and dт-1 present deficits achieved in years т and т-1, d* is the target fiscal deficit determined at the level of GDP 1%, gт is the actual GDP rate in year т, and g* is the potential medium term actual GDP growth rate. The deficit in the formula is presented as a percentage of GDP, while the GDP growth rates are presented as percentages. The adjustment coefficient 'a' indicates the pace at which the actual deficit approximates the target deficit, and the coefficient 'b' indicates the divergence of the fiscal deficit in the year t from the target deficit due to the difference in GDP growth rate in the year t from the potential GDP growth rate. In 2011 to 2013 period, the numerical value of the coefficients has been determined at the level of a=0.3 and b=0.4 , while the potential GDP growth rate has been envisaged as g*=4%. As of 2014, the numerical value of the coefficients a and b, as well as the potential GDP growth rate, shall be specified by the Fiscal Council and it will be valid over the period of thee years at the minimum. The general state level debt shall include the direct general state level debt and the issued general state levels guarantees (the indirect debt) to both the domestic and international creditors. - 10 In case that the general state level debt excluding the debt from restitution exceeds GDP 45%, the Government shall be obliged to submit the debt reduction program against GDP to the National Assembly in addition to the budget for the following year. The Fiscal Council shall submit to the National Assembly their expounded opinion about the Government program for debt reduction, and the representative of the Fiscal Council shall expound the opinion before the National Assembly. The Government shall be obliged to harmonize the draft law on restitution with the principles of fiscal responsibility. The Fiscal Council shall submit to the National Assembly their expounded opinion on whether the provisions on restitution to former owners in money or through an emission of state securities have been duly harmonized with the principles of fiscal responsibility, and the representative of the Fiscal Council shall expound the opinion before the National Assembly. The special fiscal rules shall ensure that the fiscal deficit reduction against GDP is predominantly achieved by means of reduction of current public spending. The objective of the special fiscal rules is also to achieve the change the public spending structure towards the reduction of current expenses and towards the increase of public investments. Individual salaries of the employees in the public sector and pensions shall be increased in January 2011 by the amount of consumer prices growth over the past six months. In April 2011, salaries and pensions shall be increased by the amount of consumer prices growth over the past three months, with an increase by one half of the actual GDP growth over the past year if such growth was positive. In April 2012, salaries and pensions shall be increased by the amount of consumer prices growth over the past six months, with an increase by one half of the actual GDP growth over the past year in case that such growth was positive. In October 2011 and in October 2012, salaries and pensions shall be increased to match the growth of consumer prices over the past six months. From 2013 to 2015, the aggregate amount of funds for salaries shall grow at the rate of consumer prices increased by one half of the actual GDP growth from the previous year. From 2013 to 2015, the average pensions shall grow at the growth rate of consumer prices increased by the GDP rate of more than 4%. The fiscal rules that regulate the growth of pensions and salaries shall be applied after 2015, too, until the share of pensions in GDP reaches 10%, and the share of salaries in GDP reaches 8%. In calculation of consolidated general state deficit for 2011, expenses and expenditures shall not include the portion of the total public investments that exceeds 4% of GDP and over the period 2012 to 2015 the portion of public investments that exceeds GDP 5%. The portion of public investments above the highest levels by which the increase of the consolidated general state deficit is allowed in accordance with the general fiscal rule, must not exceed GDP 2%. The Fiscal Council shall, in cooperation with the State Auditing Institution, pass their opinion on whether the share of public investments is in accordance with the accounting standards or not. - 11 Fiscal Rules for Local Government Article 27h The local government fiscal deficit may occur only as a result of public investments. The local government fiscal deficit is a constituent part of the consolidated general state deficit. The local government fiscal deficit in any year cannot exceed 10% of their revenues in that same year. Local government executive body may submit a request to the Ministry for the approval of fiscal deficit above the said percentage only if such fiscal deficit is the result of their realization of public investments. The request for approval of excessive deficit shall be submitted to the Ministry no later than May 1 of the current year, for the following budget year. The request for approval of excessive deficit shall contain a detailed justification of investments that cause the excess in deficit, an analysis of the long term sustainability of the local government debt and other information at the request by the Ministry. The Ministry is obliged to respond to such a request from the local government no later than June 30 and to provide an explanation of their decision. While approving the excessive deficit, the Ministry shall take into account both the justification of the request and the potential to fit the request within the planned deficit of consolidated state sector for the following year. In case that the local government spending should exceed the deficit limit in a certain year without an approval from the Ministry, the Minister shall discontinue and/or reduce the transfer of funds from the Republic of Serbia budget, that is, the relative share of income taxes and companies' profit taxes in the following budget year, for the amount of such overdraft. Exceptional Circumstances Article 27i The Government may, under exceptional circumstances and for a limited period of time only, deviate from the fiscal principles and rules specified by this Law, in cases of natural disasters and external shocks that may have an impact on the human health, national safety and drop in the economic activities, upon reaching a decision on such a deviation. The Government shall submit a report to the National Assembly, in which they shall state clearly the following: 1) The reasons for the deviation from the fiscal principles or rules; 2) The measures that the Government intend to take in order to resume the course of abiding by the fiscal principles or rules; 3) The time period after which the Government expect that they shall be in the position to resume the course of abiding by the fiscal principles or rules. The Government shall submit the report from the paragraph 2 of this Article to the National Assembly within thirty days from the date of adoption of the decision from the paragraph 1 of this Article or in the next annual Fiscal Strategy Report, whichever occurs first. - 12 Disclaimer Article 27j Attached to the Fiscal Strategy Report, a Disclaimer shall be submitted, which is signed by the Minister. The Disclaimer shall contain the mandatory statement that all the reports covered by the Disclaimer are: 1) Prepared by using analysis methods and assessments that meet highest standards of professional integrity and expertise; 2) Based on updated and accurate economic and fiscal information available at the time when the reports were concluded; 3) Inclusive of all the decisions adopted by the Government, which have significant economic or fiscal impact of which the Minister was aware at the time when the Disclaimer was signed.“ Article 16 Article 31 shall be amended to read as follows: "Article 31 The procedure of budgeting and adoption of budget and financial plans for the organizations for mandatory social insurance shall be executed in accordance with the budget calendar, in the following manner: 1) Calendar for the Republic of Serbia level: (1) February 15 – the Minister shall provide instructions for priority areas financing proposal; (2) March 15 – the Republic of Serbia Budget direct beneficiaries, based on the instruction from the sub-item (1) of this item, shall submit to the Ministry their proposals for identification of priority areas financing for the budget year and for the two following fiscal years; (3) April 30 – the Minister, in cooperation with the ministries and institutions in charge of the economic policy and economic system, shall prepare the Fiscal Strategy Report, which contains the economic and fiscal policy of the Government with the projections for the budget year and for the following two fiscal years; (4) May 15 – the Minister shall deliver draft Fiscal Strategy Report to the Fiscal Council; (5) June 15 – the Fiscal Council shall pass their opinion about the draft Fiscal Strategy Report; (6) July 1 – the Minister shall pass the draft Fiscal Strategy Report to the Government for adoption; (7) July 15 – the Government shall adopt the Fiscal Strategy Report and they shall pass it to the National Assembly for consideration; (8) August 1 – the Minister shall deliver the instruction for draft Republic of Serbia Budget; (9) August 1 – the Minister shall deliver the Fiscal Strategy Report to the local government and mandatory social insurance organizations; - 13 (10) August 31 – National Assembly delivers their comments and recommendations on the Fiscal Strategy Report to the Government; (11) September 15 – the Republic of Serbia Budget direct beneficiaries and mandatory social insurance organizations shall deliver their draft medium-term and financial plan to the Ministry; (12) October 1 – the Government, upon proposal by the Minister, adopts the revised Fiscal Strategy Report, together with information on financial and other effects of the new policies, while taking into account the macro economic framework that was updated after April 30; (13) October 5 – the Government shall deliver the revised Fiscal Strategy Report to the National Assembly; (14) October 15 – the Minister shall deliver to the Government draft law on the Republic of Serbia Budget, draft Decisions on granting approvals for financial plans of mandatory social insurance organizations and financial plans of mandatory social insurance organizations; (15) November 1 – the Government shall adopt draft Law on the Republic of Serbia Budget and deliver it to the National Assembly together with the draft Decisions on granting approvals for financial plans of mandatory social insurance organizations and the financial plans of mandatory social insurance organizations; (16) December 15 – the National Assembly shall pass the Law on the Republic of Serbia Budget and the Decisions on granting approvals for financial plans of mandatory social insurance organizations; 2) Budget Calendar for local governments: (1) August 15 – local administration body in charge of finances shall issue instructions for draft local government budget; (2) September 15 – local government budget direct beneficiaries shall deliver draft financial plan to the local administration body in charge of finances for the budget year and for the following two fiscal years; (3) October 15 – local administration body in charge of finances shall deliver draft Decision on Budget to the relevant executive body of the local government; (4) November 1 – the relevant executive body of the local government shall deliver draft Decision on Budget to the local government assembly; (5) December 20 – local government assembly shall pass the Decision on Local Government Budget; (6) December 25 – local administration body in charge of finances shall deliver the Decision on Local Government Budget to the Minister. The deadlines from paragraph 1 of this Article shall be the final deadlines in the Budget Calendar.“ Article 17 The titles above Article 33 and Article 33 shall be deleted. Article 18 The titles above Article 34 and Article 34 shall be deleted. - 14 Article 19 Paragraph 1 of the Article 51, after the word "Ministry“, the wording "Treasury Administration“ shall be added. Article 20 In Article 56, following paragraph 4, new paragraphs 5 and 6 shall be added to read as follows: "In case of the budget beneficiaries where the total annual appropriation for forced collection has been used the Treasury Administration shall reallocate funds by reducing the second appropriation for the amount of forced collection. The Treasury Administration shall execute the forced collection orders.“ The former paragraphs 5, 6 and 7 shall become paragraphs 7, 8 and 9. Article 21 In Article 58, paragraph 1, the word "bookkeeping" shall be replaced by the word "accounting". In paragraph 2, the word "bookkeeping" shall be replaced by the word "accounting". Article 22 In paragraph 5 of the Article 60, after the word "five" the work "working" shall be added. Article 23 Paragraphs 12 and 13 shall be added in the Article 61 to read as follows: "In case that during the year circumstances are changed in such a manner as not to compromise the established priorities within the budget, the Government, that is, the relevant executive body of the local government, shall reach a decision to transfer the amount of appropriation that can no longer be used to the current budget reserve allowing that such amount may be used for purposes that have not been envisaged in the budget or for the purposes for which insufficient funds have been allocated only. The total amount of reallocation from paragraph 12 of this Article cannot exceed the amount of difference between the approved budget allocation for budget reserve and the maximum amount of current budget reserve funds specified by this Law.“ Article 24 In Article 65, paragraph 1, item 3 shall be amended to read as follows: "3) Other revenues.“ Article 25 In Article 69, after paragraph 2, a new paragraph 3 shall be added to read as follows: "The current budget reserve shall be set at the 1.5% maximum of the total revenues and proceeds from the sales of non-financial assets for the budget year.“ The former paragraphs 3 and 4 shall become paragraphs 4 and 5. - 15 In former paragraph 5, which shall become paragraph 6, the wording: "paragraphs 1 to 4“ shall be replaced by wording "paragraph 1 to 5“. Article 26 In Article 70, paragraph 3, the percentage: "1.5 %“ shall be replaced with the percentage of "0.5 %“, and after the word "revenues“ the following words shall be added: "and proceeds from the sale of non-financial assets“. Article 27 In Article 75, paragraph 4, the wording "annual report“ shall be replaced by the wording "financial statements“. Article 28 In Article 78, paragraph 1, the introductory sentence for item 1 and sub-items 1, 2 and 3 shall be amended to read as follows: "The procedure of preparation, drafting and submission of financial statements of the Republic of Serbia budget, local governments' budgets and the budgets of the organizations for mandatory social insurance and of the annual financial statements of the budget beneficiaries and beneficiaries of organizations for mandatory social insurance funds shall be executed in accordance with the following calendar schedule, and specifically: 1) Calendar for the Republic of Serbia level: (1) February 28 – the indirect beneficiaries of the Republic of Serbia budget funds shall prepare the annual financial report for the previous budget year and they shall submit it to the relevant direct beneficiaries of the Republic of Serbia budget funds; the judiciary bodies that are presented aggregately in the Republic of Serbia budget shall prepare the annual financial report for the previous budget year and submit it to the High Judicial Council, that is, to the State Prosecutorial Council; the beneficiaries of the Republic Institute for Medical Insurance funds shall prepare the annual financial report for the previous budget year and submit it to the Republic Institute for Medical Insurance; (2) March 31 – the direct beneficiaries of the Republic of Serbia budget shall prepare the annual report and submit it to the Treasury Administration, and the direct beneficiaries of the Republic of Serbia budget funds responsible for the indirect beneficiaries of the Republic of Serbia budget funds shall verify, reconcile data from their annual reports on budget execution and prepare the consolidated annual report on budget execution that shall be submitted to the Treasury Administration; the High Judicial Council, that is, the State Prosecutorial Council, shall verify, reconcile data from the annual reports on budget execution by the judiciary bodies that are presented as the aggregate amount within their budget line and prepare consolidated annual reports on budget execution, which shall be submitted to the Treasury Administration; (3) April 30 – organizations for mandatory social insurance shall adopt decisions on financial statements of the organizations for mandatory social insurance, adopt reports on financial plans' implementation and submit these to the Treasury Administration; the Republic Institute for Medical Insurance shall verify, reconcile data from the annual reports on financial plan implementation of the beneficiaries within its jurisdiction, consolidate data and prepare the consolidated annual report on financial plan implementation, which shall be submitted to the Treasury Administration;“. - 16 In item 2, the introductory sentence and sub-items 1 and 2 shall be amended to read as follows: "2) The Calendar of financial statements of the local governments' budgets: (1) February 28 – the indirect beneficiaries of the local government budgets' funds shall prepare the annual financial report for the previous budget year and submit it to the relevant direct beneficiaries of the local governments' budget funds; (2) March 31 – the direct beneficiaries of the local governments' budget funds shall prepare the annual report and submit it to the local administration body in charge of finances, and the direct beneficiaries of the local governments' budget funds that are responsible for the indirect beneficiaries of local governments' budget funds shall verify, reconcile data from their annual reports on budget execution and prepare the consolidated annual report on budget execution, which shall be submitted to the local administration body in charge of finances;“. Article 29 Article 79 shall be amended to read as follows: "Article 79 The financial statement shall contain the following: 1) The annual financial report on budget execution with additional notes, explanations and justifications; 2) The annual financial report on plan implementation of the organizations for mandatory social insurance, as well as the annual consolidated financial report of the Republic Institute for Medical Insurance, with additional notes, explanations and justifications; 3) An external audit report. The annual financial reports from the paragraph 1 of this Article, which constitute the financial statement of the Republic of Serbia budget, the financial statement of the local governments' budgets and the financial statement of the organizations for mandatory social insurance have to be prepared in accordance with the budget content and categories, that is, with the content and categories from the financing plan, and the financial result in such reports shall be determined in accordance with the International Public Sector Accounting Standards – cash based. The format and the content of the additional notes, explanations and justifications, which shall be delivered attached to the annual financial reports from the paragraph 1, items 1 and 2 of this Article, shall be defined in an act by the Minister.“ Article 30 Article 79a shall be added to follow the Article 79 to read as follows: "Article 79а The Republic Directorate for the Republic of Serbia Property, which maintains a unified register of immovable property and comprehensive records of the movable property owned by the Republic of Serbia, shall be obliged to deliver to the Ministry and its Treasury Administration no later than March 31 of the current year, their report on the structure and value of the Republic of Serbia property, based on the reports on the structure and value of the property of beneficiaries of funds owned by the Republic of Serbia that were delivered to them, based on which they shall - 17 prepare the financial statement of the Republic of Serbia budget for the previous year. The content of the Report from paragraph 1 of this Article shall be specified by the Minister.“ Article 31 In Article 80, item 3, after the word "harmonization", the wording "and coordination of financial management and control and internal audit" shall be added. Article 32 Article 81 shall be amended to read as follows: "Article 81 The beneficiaries of public funds shall introduce financial management and control, which are to be implemented through policies, procedures and activities with the task to provide reasonable assurance that their objectives will be achieved through the following: 1) Business operations in accordance with the regulations, internal acts and agreements; 2) Substantiality and integrity of financial and business reports; 3) Cost-effective, efficient and effective use of funds; 4) Protection of funds and data (information). The financial management and control shall include the following elements: 1) Control environment; 2) Risk management; 3) Control activities; 4) Information and communications; 5) Monitoring and evaluation of the system. The financial management and control shall be organized as a system of procedures and responsibilities of all the persons within the organization. Head of the public funds' beneficiary shall be responsible for introduction, maintenance and regular updating of the financial management and control system. The head of the public funds' beneficiary may assign the task of introduction, maintenance and regular updating of the financial management and control system to a person that they authorize for these tasks. The manager from the paragraph 4 of this Article shall inform the Minister in the manner specified by law no later than March 31 of the current year for the previous year about adequacy and functioning of the financial management and control system. The Minister shall specify the universal criteria and standards for introduction, functioning and reporting about the financial management and control system in the public sector.“ Article 33 Article 82 shall be amended to read as follows: - 18 "Article 82 Public funds beneficiaries shall introduce internal audit. The Head of the public funds' beneficiary shall be responsible for establishing and for providing the necessary conditions for adequate functioning of internal audit. The internal audit shall be independent from the business activity that is being audited in the organizational sense, and it shall not be a part of any operational process, that is, of any organizational part of the organization, and it shall be directly accountable for its work to the Head of the public funds' beneficiary. The functional independence of the internal audit shall be provided for by means of independent decision making process in relation to the following: audit area based on risk assessment, audit method and reporting on the audit performed. Based on an objective review of evidence, the internal audit shall provide a verification of adequacy and functioning of the existing risk management processes, control and organizational management of whether such processes function in the envisaged manner and enable that the organization's objectives are achieved. Internal audit shall provide advisory services consisting of advice, guidelines, training, assistance or other services with the aim to increase the value and to improve the management process in the organization in question and risk management and control. Internal audit shall be performed by internal auditors. The internal auditors shall apply the international standards of internal audit, ethics code of internal audit and the principles of objectiveness, competence and integrity to perform their function. The internal auditors shall be obliged to keep the secret of official and business information. The Head from paragraph 1 of this Article shall inform the Minister about the functioning of the internal audit system in the prescribed manner by March 31 of the current year for the previous year. The Minister shall prescribe common criteria for organization and standards and methodology instructions for activities and reporting of internal audit, and he/she shall define in more details the internal audit activities in public sector." Article 34 Article 83 shall be amended to read as follows: "Article 83 The harmonization of financial management and control and internal auditing shall be performed by the Ministry – Central Harmonization Unit. The Central Harmonization Unit shall perform the following tasks: 1) Central harmonization, coordination, monitoring of implementation and assessment summary of the quality of financial management and control and internal auditing in public sector; 2) Defining shared criteria and standards for establishing and functioning of financial management and control system; 3) Defining shared criteria for organization and activities of internal audit in the public sector; - 19 4) Maintenance of register of authorized internal auditors in the public sector and maintenance of records on internal audit charter; 5) Professional training courses, certification and monitoring of internal auditors' work; 6) Professional training courses for managers and employees in the public sector in the area of financial management and control, in accordance with the internationally accepted standards; 7) Consolidation of annual reports from the Article 81, paragraph 5 and from the Article 82, paragraph 10 of this Law on the state of financial management and control and internal audit. The Minister shall deliver to the Government the consolidated Annual Report from paragraph 2, item 7 of this Article. The employees performing the tasks of the Central Harmonization Unit are obliged to maintain confidentiality of official and commercial information. The Minister shall prescribe the program of professional training and conditions and procedure for certification, that is, for the exam system for acquiring professional title of certified internal auditor in the public sector, professional training and proficiency courses, as well as the guidelines and rulebooks for tasks from the paragraph 2 of this Article.“ Article 35 Following Article 92, a new Section VIIIА containing Articles 92а to 92w and titles above these Articles shall be added to read as follows: "VIIIа THE FISCAL COUNCIL The Fiscal Council Article 92a This Law shall regulate the introduction of the Fiscal Council. The Fiscal Council is an independent state body. For the performance of tasks specified in its mandate, the Fiscal Council shall be accountable to the National Assembly. The Fiscal Council shall be a legal entity. The Fiscal Council shall have its seal according to law. The seat of the Fiscal Council shall be in Belgrade. The Fiscal Council shall have three members that shall be elected by the National Assembly. Expert services of the Fiscal Council shall be established to perform expert and administration tasks. Article 92b Members of the Fiscal Council shall be proposed by the following: 1) President of the Republic shall nominate the Chairperson of the Fiscal Council; 2) The Minister shall nominate one member; - 20 3) The Governor of the National Bank of Serbia shall nominate one member. In case that the National Assembly fails to elect the proposed member, the election procedure for that member shall be repeated. The Fiscal Council shall be operational only when all the three member of the Fiscal Council are elected. After the election, the Fiscal Council members shall take an oath before the National Assembly, whereby they shall assume their office. The oath shall read as follows: "I swear that I shall be loyal to the Republic of Serbia. I promise to abide by the Constitution and the laws. I swear by my honour that I shall perform my duties independently, fair and bearing in mind the prosperity of present and future generations". Article 92c A person who is the citizen of the Republic of Serbia, who does not perform any public function, who has no criminal record and who meets the following criteria can be elected the Fiscal Council member: 1) to hold the relevant MA, Master or doctoral degree in the field of economic sciences, to have published scientific research papers in the fields of macroeconomics, fiscal policies, public finances, accounting or some other relevant scientific field, and a minimum of five years of working experience; 2) In addition to the conditions from the item 1 of this paragraph, the candidate for the Fiscal Council Chairperson should have a minimum of five years of practical experience in managerial jobs. A member of the Fiscal Council shall not be allowed to perform any other task or paid job, except for the scientific, educational, artistic, literary and advisory, editorial or some other and similar intellectual work, in accordance with the law. A member of the Fiscal Council cannot be a member of a political party and they must not be guided by their own political agenda in their work. Article 92d The Fiscal Council members shall be elected for the period of six years, and the membership in the Fiscal Council can be terminated before the end of their mandate in the following cases: 1) If they take a public office; 2) If they are eligible for retirement; 3) If they submit resignation; 4) If they are sentenced to unconditional final prison sentence longer than six months; 5) If they are debarred or suspended with a final court decision; 6) If they are subject to loss of citizenship; 7) In the case of death; 8) By deprivation of office. The National Assembly may deprive a member of the Fiscal Council of his/her office it the following fact of facts have been established: - 21 1) That the Fiscal Council member is no longer capable of performing their duties due to the mental or physical medical condition, which shall be determined based on the documentation by the relevant medical institution; 2) That the Fiscal Council member failed to act in accordance with the Constitution and the law. Article 92e The Fiscal Council shall immediately inform the National Assembly about the reasons for termination or deprivation of office for its member. The initiative for removal from office of a Fiscal Council member can be submitted by a minimum of 20 National Assembly deputies. The initiative shall be submitted in writing, together with the particulars and evidence of reasons from the Article 92d of this Law. The initiative shall be considered by the relevant working body of the National Assembly. The Fiscal Council member the deprivation of office of whom has been proposed, shall be entitled to address the members of the relevant working body of the National Assembly in writing or in person, in the meeting in which the initiative on his/her deprivation of office shall be discussed. After having discussed and voted on the initiative, the relevant working body of the National Assembly shall submit to the National Assembly a report containing proposal that the National Assembly should reach a decision to deprive the Fiscal Council member in question of office or to dismiss the said initiative. The office and related rights of the Fiscal Council member shall be terminated on the date of adoption of decision on deprivation of office in the National Assembly sitting. Article 92f The relevant working body of the National Assembly shall be entitled to recommend to the National Assembly on their own initiative that a Fiscal Council member be deprived of office in cases where, based on a continuous monitoring of Fiscal Council work according to law or base on some other information, reasons for deprivation of office from Arricle 92d of this Law have been found. In case of the procedure where the relevant working body of the National Assembly proposes that a Fiscal Council member be deprived of office on their own initiative, provisions of the Article 92e, paragraph 5 of this Law shall be applied. Tasks and Responsibilities of the Fiscal Council Article 92g The Fiscal Council shall: 1) Verify macroeconomic and fiscal presumptions used for preparation of Fiscal Strategy Report by the Government; 2) Provide independent and credible assessment of economic policy measures that were proposed by the Government with the aim to achieve quantitative fiscal targets that were set by the Government; 3) Assess basic fiscal risks and probability levels of Government's achievement of its fiscal targets in the future; - 22 4) Assess the measure to which the Government abided by its own fiscal rules in the past; 5) Assess the need to activate any of the regulations for special circumstances and the probability with which the Government harmonization plan will facilitate abiding by the fiscal rules; 6) Test the adequacy of economic classifications, including the regular classification of capital expenditures, in order to provide for the adequate measuring of quantitative fiscal targets. Article 92h The Fiscal Council shall perform the following tasks: 1) Prepare their opinion about the draft Fiscal Strategy Report; 2) Prepare and deliver to the National Assembly the analysis of: - The revised Fiscal Strategy Report of the Government for the fiscal year in question; - draft law on the Republic of Serbia budget, which includes proposed budget revision, as well as draft law on amendments and addenda submitted during the National Assembly debate; 3) Prepare and submit to the National Assembly the analysis of draft law on financial statements of the Republic of Serbia budget and consolidated balance sheet of the state general level budget; 4) Prepare and deliver to the National Assembly assessments on fiscal impacts from other draft laws, as well as on amendments submitted during the discussion in the National Assembly. The Fiscal Council shall submit the analyses from the paragraph 1, item 2 of this Article to the National Assembly within 15 days from the submission date of the revised Fiscal Strategy Report by the Government to the National Assembly, that is within 15 days from the submission date of draft Law on Republic of Serbia Budget or draft Budget Revision. Article 92i The Fiscal Council may, at any time, on its own initiative or upon request, provide advice to the Government on issues of fiscal policy and management of public finances. All the analyses, reports, recommendations and advice prepared by the Fiscal Council shall be made publicly available within five working days from the date of its delivery to the Minister, Government or the National Assembly. The reports, analyses and estimates of the Fiscal Council shall be made available to the general public on the Fiscal Council Internet page. The reports, analyses and estimates of the Fiscal Council shall be published in the Official Gazette of the Republic of Serbia if necessary, as well as on the Internet presentation of the National Assembly, Government, Ministry of Finances, or relevant local government unit. - 23 Obligation to Supply Requested Information to Fiscal Council Members Article 92j The Fiscal Council shall be authorized to request the Ministers to deliver relevant economic and fiscal forecasts and analyses to them, which may be necessary to the Fiscal Council members to perform their tasks and responsibilities pursuant to this Law. Additionally, the Fiscal Council may request from the Minister to prepare and deliver to the Fiscal Council members the fiscal projections based on alternative presumptions and scenarios. The Fiscal Council shall be authorized to request that information be submitted to them by all the public sector actors, including the public companies, providing that such information is considered to be of the essence for the work of Fiscal Council. In case that the requested information of the essence for the work of Fiscal Council is not provided, the Fiscal Council Chairperson shall inform the National Assembly about such outcome. Organization and Membership Article 92k The Chairperson of the Fiscal Council shall: 1) Preside over the work of the Fiscal Council; 2) Call meetings of the Fiscal Council members and specify the agenda for such meetings; 3) Represent the Fiscal Council; 4) Approve publishing of opinions and assessments of draft laws; 5) Manages the Fiscal Council as a state body; 6) Be accountable to the National Assembly for the quality and reliability of assessments prepared by the Fiscal Council. The Chairperson of the Fiscal Council shall adopt the Rules of Operations that will specify the manner and procedure in accordance to which the Fiscal Council performs their tasks, decision making and other issues regulated by this law that are of significance for the work of the Fiscal Council, with prior approval by the relevant working body of the National Assembly. Article 92l The Fiscal Council shall have its expert service with special advisors and an auxiliary service. The managers of the services from the paragraph 1 of this Article shall be nominated by the Chairperson of the Fiscal Council for the period of six years. The manner of performance of tasks, organizational structure of the services and the systematization of jobs shall be defined with a legal act of the Fiscal Council, with the prior approval by the relevant committee of the National Assembly. - 24 Article 92m Expert service and its special advisors shall be managed by the supreme special advisor. Person that is a citizen of the Republic of Serbia, that meets the general conditions for employment in state administration, that has a PhD degree in the field of economics, that has published works in the field of macroeconomics, fiscal policy, public finances, accounting or some other related field and that has a minimum of five years of working experience can be appointed for the supreme special advisor. Article 92n Duties of the special advisor shall be discharged by a person that is the citizen of the Republic of Serbia; that is not a public officer; that does not have a criminal record and that has the following: 1) Relevant university degree from the field of economy, finances, accounting or some other relevant field; 2) Excellent theoretical knowledge and practical skills about the budget and financial issues; 3) A minimum of five years of work experience in the field of economy, finances, accounting or in some other relevant field. The special advisor must not perform other paid jobs, except for the scientific, educational, artistic, literary and advisory, editorial or some other work in accordance with the law. Article 92o Fiscal Council shall be entitled to engage external experts, for certain tasks within their mandate. The external expert has to possess adequate expert knowledge and work experience. The external expert may be a physical or a legal entity. A foreign citizen may also be engaged as the external expert, who is a recognized expert in the areas of importance for the execution of tasks from the mandate of the fiscal advisor. The entire working documentation, prepared by the external expert, shall be made available and shall belong to the Fiscal Council. Article 92p The auxiliary service shall be managed by the secretary. A person that fulfils the general conditions for employment in state administration, that has the university degree in law or in economy, that has passed the state exam and that has at least nine years of working experience in the relevant profession can be appointed secretary. Equal Position Article 92q The Fiscal Council Chairperson shall be entitled to the basic salary amounting to the basic salary of the special advisor, and increased by 30 percents. - 25 Fiscal Council members shall be entitled to the basic salary amounting to 90 percents of the basic salary of the Fiscal Council Chairperson. As for the other rights, duties and responsibilities of the Fiscal Council members, provisions of legal acts regulating the rights of elected persons shall be applied accordingly. Article 92r The supreme special advisor shall be entitled to the basic salary amounting to the 90 percents of the salary that is determined for the Fiscal Council members. As for the other incomes and rights of the supreme special advisor, provisions of legal acts regulating such rights of the civil servants shall be applied, unless otherwise prescribed by this Law. Article 92s Fiscal Council Secretary shall be entitled to the basic salary that is equal to the amount of the salary of the State Secretaries in Ministries. As for the other incomes and rights of the secretary, provisions of the law regulating such rights of civil servants shall be applied, unless otherwise prescribed by this Law. Article 92t The number of special advisors shall be determined by the official document passed by the Fiscal Council, with the previous agreement from the part of the relevant working body of the National Assembly. Special advisor may be a full-time employee or a part-time employee. The special advisor shall be entitled to the basic salary that shall be calculated by multiplying the salary and its basis by the coefficient to which the first category civil servants are entitled, or 9.00. The salary calculation and payment basis from the paragraph 5 of this Article shall be specified by the law regulating the salaries of civil servants and public sector employees. Article 92u Persons working in the Financial Council services shall be of equal ranking with any other state administration executive or officer, unless otherwise prescribed by this Law. Decision on employment and termination of employment in the Fiscal Council shall be reached by the Fiscal Council Chairperson. The decision from the paragraph 2 of this Article shall be final. Persons working in the Fiscal Council services, except for the special advisors, shall be entitled to salary, which shall be equal to the salary prescribed by the regulations specifying the salaries of state officials and public sector employees. Article 92v The basic salary determined by the Article 92q, paragraphs 1 and 2, Article 92r, paragraph 1 and Article 92s, paragraph 3 may, due to some special complexities of the work of the Fiscal Council, be increased for a bonus that shall by no means be higher than 30 percents thereof. - 26 Bonus criteria and amount shall be specified by the Chairperson of the Fiscal Council. Fiscal Council Assets Article 92w Assets necessary for the work of Fiscal Council and their expert services shall be provided in the Republic of Serbia Budget. Fiscal Council members shall prepare the draft Financial Council financial plan upon proposal from the secretary and shall deliver it to the relevant working body of the National Assembly for their approval. Upon approval from the relevant National Assembly working body, the Fiscal Council shall deliver the draft financial plan to the Ministry. Business premises, equipment and resources necessary for the work of the Fiscal Council shall be provided by the Government. Fiscal Council financial operations’ audit shall be carried out by the State Auditing Institution.“ Article 36 In Article 93, items 1, 2 and 3 shall be amended to read as follows: "1) Financial planning, which includes: (1) Projections of inflow and outflow of the Republic of Serbia budget during the budget year on quarterly, monthly and daily levels; (2) Defining payment limits; (3) Projections of necessary amounts of money on quarterly and monthly levels for deficit financing and repayment of debts and planning to maintain an adequate liquidity level during the budget year; 2) Managing financial assets of the Republic of Serbia, which includes: (1) Liquidity management through management of monetary assets in the consolidated treasury account of the Republic of Serbia and foreign currency assets of the Republic of Serbia; (2) Budget execution and drafting of periodical reports on budget execution; (3) Placement of available monetary assets; (4) Reduction of exposure to financial risks by using financial derivatives; (5) Development of procedures for receivables' collection through the banking system; (6) Management of other financial assets (shares, bonds, receivables, etc.) and financial derivatives; 3) Expenditure control, including the approvals of payments not exceeding the specified appropriations;“. Item 6 shall be amended to read as follows: "6) Establishing and maintenance of information system for managing public finances of the Republic of Serbia, that is, of the local government and management of that system;“. - 27 Article 37 Paragraph 5 in Article 100 shall be deleted Article 38 In Article 103, item 2, the words "41, Article 42, paragraph 6 and Article 50“ shall be replaced by "41 and Article 42, paragraph 6.“ In item 6, the words "Articles 74 to 79“ shall be replaced by the words "Articles 74 to 79а“. Article 39 Paragraph 2 shall be added in the Article 110 to read as follows: "The beneficiaries from the paragraph 1 of this Article, by the deadline established by the act of the Minister, shall maintain their accounting records and shall draft the prescribed financial reports, and the transactions and business dealings shall not be entered in the Treasury General Ledger.“ Article 40 Paragraph 2 in the Article 112 shall be deleted. Article 41 In Articles 30, 32, 35, 36, 37, 38, 39, 40, 42, 45 and 109 and in the title above the Article 45, the word "Memorandum" in the relevant noun case shall be replaced by the following wording: "Fiscal Strategy Report" in the relevant noun case of that phrase. Article 42 The nominators shall propose the members of the Fiscal Council to the National Assembly within 60 days from the date of this Law coming into force. The Chairperson of the Fiscal Council shall adopt the Rules on their work within 30 days from the date of calling of the first Council meeting. The Government shall be obliged to provide the conditions for the work of Fiscal Council within 60 days from the date of election of the Chairperson and members of the Fiscal Council. Article 43 Provisions of the Article 2, paragraph 1, item 3, in its part pertaining to the Fiscal Strategy Report (the new items 25j and 25l), paragraphs 5 and 7, of the Article 4, Article 15, in the part that pertains to the Fiscal Strategy Report (the new Articles 27c, 27d, 27e, 27f and 27j) and Articles 16, 17, 18, 28, 40 and 41 of this Law shall be applied as of January 1, 2011. The provisions of the Article 29 of this Law shall be applied as of January 1, 2012. Provisions of this Law that regulate the scope of jurisdiction of the Fiscal Council in the part that pertains to the Fiscal Strategy Report, Budget and financial statement drafting and preparations, as well as to the drafting and delivery of opinions, analyses, assessments and other documents to the relevant bodies shall be applied as of January 1, 2011. - 28 The by-law from the Article 30 of this Law shall be passed within 60 days from the date when this Law came into force, the by-laws from Articles 4, 5, 32, 33 and 34 of this Law shall be passed within six months from the date when this Law came into force, and the by-law from the Article 29 of this Law shall be passed by December 31, 2011. Article 44 The provisions of regulations and other general acts that came into force before coming into force of this Law, in its part that pertains to the Memorandum on Budget and economic and fiscal policy, shall be accordingly applied on the Fiscal Strategy Report as of January 1, 2011, except in cases where these are contrary to this Law. Article 45 This Law shall come into force on the following day from the date of its publishing in the Official Gazette of the Republic of Serbia.