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NALAS and the World Bank facilitate dialogue of SEE Ministries of Finance and Local Government Associations

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At the City to City Dialogue on Municipal Finance, Urban Planning and Land Management organised by the WB-Austria Urban Partnership Program that took place in Belgrade, Serbia on October 23-25, 2016, NALAS was given the role to facilitate a roundtable of Ministries of Finance and Local Government Associations of South East Europe titled “Collaborative National and Regional Dialogues for Improving the Intergovernmental Finance Systems in South East Europe (SEE)”.

The participants of the roundtable represented a mix of representatives of Ministries of Finances (MoF) and Local Government Associations (LGAs): Ms Nevenka Brkić (MoF Croatia), Ms. Radmila Sandeva (MoF Macedonia), Ms. Gordana Radović (MoF Montenegro), Mr Agron Haxhimali (Assciation of Albanian Municipalities), Mr Dario Runtic (Association of Cities of the Republic of Croatia) and Mr Aleksandar Marinkovic (Standing Conference of Towns and Municipalities of Serbia). The moderator of the rountable was Ms Natasha Ilijeva Acevska from the Network of Associations of Local Authorities (NALAS).  The session was organized around the following topics:

  • Current forms and results of central-local dialogue at national level;
  • Benefits of evidence-based policy design in collaborative negotiations;
  • Benefits of the regional peer learning in fiscal decentralization in SEE;
  • Roles and contributions of the Ministries and Local Government Associations.

The stage was opened by Ms Brkić who presented the role of the Municipal Finance Department (MFD) and how they cooperate with the representatives of the three levels of sub-national governments in Croatia. She stressed the personalized approach they are promoting and using of phone calls and meetings in order to build mutual understanding in the process of the local budgeting, resolving the challenges of particular local governments etc. In parallel, the Croatian ministry performs monitoring of the fiscal decentralization in all competences and proposes solutions, even changes of the Law on Local Government Finances. She especially acknowledged the productive role of the Association of Cities of Croatia and almost daily interaction with them. Ms Brkic also discussed the cooperation with the citizens and pointed out to the portal https://savjetovanja.gov.hr/ which is a platform through which the consultations for each legal document in Croatia are being carried out.

Ms Sandeva made a review of the legal framework for municipal finances in Macedonia with an accent on the types of revenues received by the local governments and  on the example of the Budget Circular presented how the Ministry supports the municipalities in their budget preparations, by providing an estimate of the revenues, elaborating the strategic priorities of the Government, the parameters of distribution of the VAT revenues to the municipalities and the Government decisions on earmarked, block and other specific grants to the municipalities. The formal bodies established to support the central – local cooperation are: Committee for monitoring the development of the System for Financing the Municipalities, the Inter-ministerial Working Group on Decentralization and the cooperation with Association of Local Government Units (ZELS). The Macedonian case provoked discussion on the level of the public debt of the municipalities which is currently very low and the possibilities to increase the monitoring while liberating the criteria for municipal borrowing.

Ms Radović presented the work of the Ministry and then her address showed an example of how a national ministry can utilize the municipal self- assessments performed by the local governments in Montenegro. She elaborated the process through which the Ministry picked up the discussions of a national forum on MFSA and working further on with the experts they developed a National Action Plan on MFSA that includes and analysis of the finances per the delegated competences to the Montenegrin local governments, and the fiscal impact it has produced both at local and central level. She also presented the case of the changes of the Law on Communal Services and the legislation of developments without building permits, examples of solutions with private – public partnerships, etc.

Mr Haxhimali, as a representative of LGA – stressed the necessity of cooperation on all levels and forms: discussions, studies, joint projects etc. He illustrated the activities and challenges that Albania and therefore AAM too has been facing, regarding: the administrative and territorial reform from 2015 be followed by the discussions on the new law of LG financing which is still in drafting process. He stressed the benefits of evidence-based policy design in collaborative negotiations by using the example of the studies facilitated by AAM and provided by donors in Albania. He especially stressed the benefits of the regional peer learning in fiscal decentralization in SEE that took place in a form of comparative analysis and peer-learning event co-organised by AAM, NALAS, MoF Albania and USAID Albania. He said that the first steps in the drafting of the new Law was: observing, comparing and presenting data from LGAs in other SEE countries. He pointed the key element, roles and contributions of the Ministries and Local Government Associations for the central – local dialogue to be: proactive and active role, informing and consulting with members, and establishment of a consultative council-LG&CG.

Mr Runtic presented another interesting case from Croatia and the cooperation between the association and the ministries – a public municipal finance database that illustrates, describes and compares the local budgets of all municipalities in Croatia and all that by functions. For example, a citizen, mayor or central level administration can easily see the expenditures of the cities for education, health, kindergartens, etc (according to the FOCOG methodology of the UN) and compare them in time and between different cities, etc. This tool is a significant step towards increased transparency and accountability for the local funds by mayors, councilors and administration as the data for each city can be easily embedded on the websites of the cities, ngo-s, etc. The database is available at: http://www.udruga-gradova.hr/proracuni/

Mr Marinkovic presented how the LGA can be a key agent in the capacity building of the local governments in implementation of new legal regulations, on the illustration of the role of the SCTM in the introduction of the Program Budgeting in Serbia. Namely, with the support of the EU, SCTM took over on itself the capacity building of all LGs in Serbia and organized a series of trainings and on-the-job mentoring by LGA experts, based on the Handbook for the Program Budgeting, thus establishing links between the strategic plans of the municipalities and their program budgets, mid-term planning, operational programs, expected results, indicators and resources. Herby, an important point was to make sure that an effective structure of the budgets is maintained, in line with the objectives of the users of the budget at local level.   Yet, he mentioned that one of the key success factors is the central – local coordination – the main delays in the implementation of the activity were due to the negligence of the budget calendar deadlines by the MoF and a Fiscal strategy which was adopted too late, as well as due to the lack of understanding and knowledge in many of the key actors.

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