Enhancing transparency of municipal finances, an important task in Montenegro’s EU integration process

25 Oct 2013

imageClosing conference; Photo: UNDP in Montenegro

Expenditure policies of local public authorities in Montenegro have become far more sophisticated than in the past, especially in light of country’s accession to the EU. The integrity of local public sector has become very dependent on the transparency of local financial management, and it has been recognized as critical in terms of gaining and retaining local communities’ trust.

Montenegrin municipalities face challenges in the area of finances, accountability and transparency of their work and cooperation between municipalities in general. The project “Strengthening mechanisms for public finance at the local level in Montenegro”, which has just finished, supported the development of capacities of municipal stakeholders and stakeholders at the central level in introducing transparent, accountable and results oriented budgeting that reflects capital investments and local and national strategic priorities.

The project “Strengthening mechanisms for public finance at the local level in Montenegro” was successfully implemented from January 2011 to October 2013, by UNDP Montenegro, with the financial support of the Kingdom of Netherlands. Partners in the project were the Ministry of Finance, Ministry of the Interior, the Union of Municipalities and all municipalities in Montenegro.

Over the past three years this project has achieved a number of results. The cooperation of municipal finance officers in various municipalities was improved, so as the discipline of municipalities in financial reporting and the quality of reports. More than 350 civil servants and other professionals from the central and local levels were trained through 25 trainings on various topics regarding municipal budget planning and execution, functioning of the municipal treasury, tax management, programme budgeting, capital budgeting, strategic planning, municipal property and borrowing, internal control, public procurement, municipal bonds and fiscal equalization in Montenegro.

At the official presentation of projects results, Mr. Radoje Žugić, Minister of Finance of Montenegro said: “Activities on the improvement of capacities of local governments have contributed to improving of the overall budgeting process, but also to meliorating the planning of capital investments and the establishment of strategic development priorities.”

The Ambassador of the Kingdom of Netherlands in Serbia, Mr. Laurent Louis Stokvis emphasized that the project had contributed to raising awareness of what is realistic to do in terms of public finance at the local level. “If you want to provide quality services you need money, and it depends on careful budget planning“, said Mr. Stokvis.

Ms. Jadranka Vojinović, on behalf of Ministry of the Interior, on this occasion said: “Montenegro has in the previous period done a lot to build a regulatory framework as a necessary precondition for an efficient, economical and effective government action to improve the quality of services to citizens provided at the national and local level.”

UN Resident Coordinator and UNDP Resident Representative to Montenegro, Mr. Rastislav Vrbensky, noted: “Strengthening public finances at the local level through a transparent and accountable planning and execution of municipal budgets leads to a more efficient implementation of defined strategic projects and initiatives that should yet contribute to a more systematic and comprehensive regional development of local government units”.

Among the most important results of the project for strengthening mechanisms for public finance at the local level in Montenegro is an improved level of transparency and accountability when it comes to spending the money of Montenegrin citizens. In just one click on the Union of Municipalities’ website all interested citizens can now monitor the financial state of local governments, including a comparative analysis of municipal revenues, expenditures, debt and arrears for the period of five years.

A better and more efficient communication has also been established between local and central authorities in monitoring the collection of local shared revenues. Through the application based on the Tax Administration database these information are now available to licensed representatives of local governments.

Despite the obvious achievements, undoubtedly, more work is needed in this field. This involves various activities regarding following components:

•    Development of projects that have been elaborated to the extent that they are acceptable to the international financial institutions and relevant EU institutions, and that they comply with strategic priorities at the national and local level;
•    Follow up activities on strengthening transparency and accountability in the management of municipal finances;
•    Improving the quality of services provided to citizens at the local level through inter-municipal cooperation;
•    Improving process management in municipalities and ministries in order to provide quality services to citizens in a transparent, accountable and economical way.