Dldp contributes to preparation of Draft Law on Local Finances

The process of preparation of the Draft Law on Local Finances (LFL) has been initiated earlier in January 2016, led by Ministry of Finance and PLGP – the Local Governance Program of USAID. Both MoF and PLGP/USAID requested dldp to contribute in the LFL preparation process, considering the fact that dldp has accumulated a huge experience in this area and enjoys a very good support of international expertise in PFM.

Ministry of Finance (MoF) announced by end of last year its intention to go for a new Law on Local Finances, trying to improve the situation of public finances at the local level and contribute to the consolidation of the Territorial and Administrative Reform (TAR). Public Finances at local level is seen as one of the most important factor which affects the quality of services provided to citizens by the municipalities.

Decentralization and Local Development Program (dldp) has been engaged for a long time now in supporting the local level in the Public Finance Management (PFM) sector, as well as providing inputs to the national level for a better informed policy making process.

Dldp engaged in the process was convinced that the combination of international best models with the evidence based policy making was the right approach to be adopted. Through international expertise it has been possible to elaborate a good starting model. 

MoF has opted for a draft LFL which would entail both revenue and expenditures part, and dldp has contributed to the Public Finance Management part. Dldp conducted a Quick PFM Appraisal of Local Finances in three partner municipalities: Shkodër, Lezhë and Durrës. This exercise carried out with the local experts of the municipalities provided a good insight of the actual stage of local finances and the practices followed by municipalities in PFM. 

A questionnaire distributed to finance experts of all 61 municipalities, aimed to assess whether issues evidenced in the three municipalities, where common to all other municipalities in the country. Responses helped to further develop the recommendations for the draft LFL.

Various workshops with Ministry of Finance, PLGP and other stakeholders have followed for the preparation of a final draft of LFL. Consultations with international PFM actors (WB, SECO, IMF, EE AS) have produced a very fruitful discussion. An e-discussion session has taken place with the local level experts, which demonstrated to be interested in various local finances issues. The process was concluded with an intensive joint work with experts of various departments within Ministry of Finance, which served to shape the final input of dldp.

A final integral document of the draft law has been delivered to Ministry of Finance by both PLGP and dldp, and will be further on submitted to the experts Working Group. A process of broad consultations of the draft law is expected during July 2016, and dldp has committed to support Ministry of Finance and the local level in organizing discussions platforms and involving all interest groups.