NOVELTIES OF LAW “ON CORPORATE AND MUNICIPAL BONDS” ON LOCAL BORROWING

Abstract

Financing the needs of local borrowing through issuing municipal bonds is one of the methods, used by local government 
bodies, which recently is regulated and well equipped with the law “On corporate and municipal bonds” enacted by the end 
of 2009 by the Albanian Parliament. This law aims at expanding the local autonomy of local government units by raising 
funds other than funds granted by central government bodies. The local borrowing of municipal bonds was originally 
regulated by the law “On local borrowing” enacted in 2008 and later, with the approval of the law “On corporate and 
municipal bonds” the methods of borrowing were enriched with borrowing from public and investors. Such way of raising 
capital is not practiced in Albania; therefore we will give a general picture of provisions of law on municipal bonds and 
procedures of issuing them. These securities are used by the local government unit to raise money for a variety of reasons 
for examples; to cover irregular cash flows or to raise immediate capital for projects for long-term financing. Bonds are 
usually sold to finance capital projects over the longer term. Local Governments may issue Short-term and Long-term debt 
in the form of Bond loans. This paper will be focused on municipal bonds, their characteristics and the way the bondholders’ 
rights are guaranteed by our legislation.