Polska pomoc

 

Support for performance budgeting system in Moldovan local self-governments

The system of local finance in Moldova remains far behind other decentralisation processes. The unfinished reforms of the 1990s resulted in a shift of many public tasks to the local level without allocation of appropriate funds, which significantly worsened the quality of the decentralised services. Fragmentary changes in inter-budgetary relations led to discrepancies between administration levels. The local finance system remains unclear, lacking mechanisms to improve tax collection and the efficiency of public spending. The local budgeting process is unpredictable, unstable and allows for biased attitudes of budgetary authorities of the higher level toward the local level.

The autonomy of local public spending is also limited due to an unclear understanding of own and commissioned responsibilities, lack of standards in public services and extreme fragmentation of the Moldovan municipalities.

International organisations have been helping in local finance reform. Many advisory publications have been issued by the UNDP, SIDA, the World Bank, OSI and GTZ, for instance. These recommendations often refer to Polish experiences, while Polish experts are also included in their preparation. The absence of reform is officially explained as the result of an unstable political situation. The real reason is a lack of political will among the majority of decision-makers. Other factors include the resistance of the central authorities and the extensive network of local administrative branches.

Given the absence of political will to implement profound decentralisation reforms and to fill the gap of systemic consultancy by the above-mentioned donors, the project aims to support finance reform through the introduction of an activity-based budgeting system in Moldovan local governments. This conforms to the plans of the Ministry of Finance of Moldova, which is observing the experience of Chisinau and five other towns, acquired in the PAUCI projects and financed among others by Polish Aid. The ministry intends to introduce the activity-based budgeting system as an obligatory method of constructing local budgets. The current government decentralisation strategy includes transferring new tasks and finances to local governments (e.g. in education administration and social assistance) on the basis of activity-based budgets.

Support for performance budgeting system in Moldovan local self-governments

The project was designed to support reform of the local finance system with the introduction of an activity-based budgeting system in local governments. It was a response to the plans of Moldova’s Ministry of Finance to introduce the activity-based budgeting system as an obligatory method of building local budgets.

Plans included improvement of the knowledge of specialists of the Ministry of Finance of Moldova related to activity-based budgeting, consultations of the Ministry’s plans concerning the obligatory nature of this form in local governments, further acquisition of practical experience by the self-government of Chisinau (identifying successive areas of the city’s activities in the arrangement of activity-based budgets), introduction of topics of activity-based budgeting and basic training for four successive Moldovan towns – Orhei, Calarasi, Soroca, and Camenca (Transnistria) – the creation of trial software linking budgets in the classification arrangement with activity-based budgets, and public discussion on reform of the budgeting system in local Moldovan governments.

Support for performance budgeting system in Moldovan local self-governments

The project contributed to the development of an effective and transparent system for financing local governments. With its implementation, the Ministry of Finance of Moldova and four successive local governments (Orhei, Calarasi, Soroca, and Dubasari) were successfully prepared for the introduction of activity-based budgeting on the basis of Polish examples. Chisinau’s officials developed (with the support of Polish and Moldovan experts) activity-based budgets for five areas of activity of the city for the year 2013. The software prepared within the project facilitates servicing of budget creation by local governments in activity-based and traditional manners.