Republic of Montenegro: Public Expenditure and ... - Vlada Crne Gore

More documents

Recommendations

Info

viii Executive Summary 23. Going forward, the Government should take the following measures to strengthen public investment planning and prioritization: • Develop a capital budget as part of the process for preparing the 2007 State budget. At this stage the capital budget may be no more than a summary of the current and future budgetary impact of each project. Yet, this could be improved over time. • Strengthen the staffing and institutional capacity of the Capital Budget Unit within the Ministry of Finance to help coordinate and prioritize investment projects. At present, no one agency has the overall responsibility of coordinating capital investment planning. While the establishment of the capital budget unit in the Ministry of Finance is a step forward, the unit currently lacks proper staffing (only one staff). An assessment of the staffing and institutional needs of the Unit in order to considerably expand its technical and institutional capacity to coordinate all public investment planning, evaluate investment proposals and coordinate capital and recurrent budget within the same framework is urgently needed. • Strengthen the technical and institutional capacity of spending units (SUs) to prepare good capital projects, based on sound economic, social and environmental analyses. The current technical capacity at line ministries, whether to produce forward estimates of costs or to develop effective indicators to measure program performance, is weak. For better budgetary impact assessment, it is also essential that both capital and recurrent budgets are estimated by the same agency. An assessment of the current technical skills and staff should be made and adequate training programs organized accordingly by the MOF for line ministries as well as the DPW and DPR. • Strengthen the technical and institutional capacity of DPR and DPW to manage the consolidation and preliminary screening of all capital projects at the preparation stage. The DPR and DPW should be well staffed to ensure availability of the necessary technical capacity required to coordinate all SUs capital budgets. Technical skills should cover the financial aspects as well as the technical aspects that are specific to each sector. An assessment of technical skills at those two agencies should be made and adequate staffing and training programs organized accordingly. 24. In view of the limited fiscal space available, the Government must also create an enabling environment for private sector participation in the transport sector to cater for the growing demand for infrastructure investments. In that respect, the government should (i) develop an adequate and strong institutional framework for private sector participation, including a well-designed and sectoral policy and strategy, (ii) the primary and secondary legislation on concessions and public procurement, and (iii) appropriate capacity within the MoF and the Ministry of Transport to evaluate proposals and assess the potential implicit and explicit contingent liabilities. These would allow to strengthen partnership with the private sector while protecting fiscal stability and limiting the government’s fiscal exposure wherever possible.
Executive Summary ix Monitoring and Controlling Fiscal Risks beyond the National Budget 25. Finally, there is a need for Montenegrin authorities monitor a comprehensive picture of fiscal activities in the broader public sector. The current coverage of the fiscal accounts includes extra-budgetary funds and partial information on local government, but excludes the SOE sector. Furthermore, all local government liabilities are not reported in the public sector debt statistics. As such, they do not provide an adequate basis for formulating fiscal policy and identifying fiscal risks. 26. Going forward, the Government may want to: • Strengthen oversight over local governments and SOEs. There are 67 SOEs in Montenegro, 15 of which are owned by the central government. The MoF lacks centralized information on the SOE sector, and gathers only partial information on local governments (i.e., excluding their extra-budgetary activities). It does not sanction delays or inadequate reporting from local governments. Thus, if the financial position of local governments or SOEs were to weaken unexpectedly, the state government could find itself in a situation where it is asked to provide financial support without adequate information. • Set up a unit within the MoF to monitor the operations and financial activities of local governments and SOEs. The unit should collect and compile quarterly statements on consolidated municipal government accounts (including extra-budgetary activities), and liabilities (including arrears and overdrafts). The unit should also create a database on SOEs, collect and compile quarterly information on SOE liabilities including arrears, and receive the income statements from the electricity company, ElektroPrivreda Crne Gore (EPCG). • Expand the coverage of fiscal and debt statistics by: (i) including all local government liabilities in the public sector debt data, with the liabilities of SOEs that are not guaranteed by the government and arrears marked as a memorandum item; (ii) including local government extra-budgetary activities in the operations of general government; and (iii) adding the operating balance of EPCG in the fiscal tables as a memorandum item. A wider coverage of fiscal operations to include that of SOEs is not recommended in the short run, in light of the other priorities. • Develop an institutional framework for private sector participation in infrastructure (PPI). While local governments intend to foster PPI, there is currently an absence of adequate legal or institutional mechanisms to develop these local projects in an orderly fashion. To prevent the emergence of fiscal risks related to these contracts, the government should develop a sound legal and institutional framework for PPI (see above). Furthermore, it should build state and local government capacities to handle PPI projects, including assessing value-for-money and fiscal risks. Over the medium term, when PPI contracts become effective, the government should monitor these activities through its municipal reporting mechanisms.
Page 1 and 2: Report No. 36533 Republic of Monten
Page 3 and 4: CONTENTS ACKNOWLEDGMENTS ..........
Page 5 and 6: TABLES Table 1.1. Montenegro’s Gr
Page 7: ACKNOWLEDGMENTS This is the first v
Page 10 and 11: ii Executive Summary and procuremen
Page 12 and 13: iv Executive Summary 2006-2010 is p
Page 14 and 15: vi Executive Summary bill in the ke
Page 18 and 19: x Executive Summary 27. The impleme
Page 20 and 21: 2 Chapter 1: The Economic and Insti
Page 28 and 29: 10 Chapter 1: The Economic and Inst
Page 30 and 31: 12 Chapter 2: Composition of Public
Page 57 and 58: 3. PUBLIC ADMINISTRATION REFORM 3.1
Page 59 and 60: Chapter 3: Public Administration Re
Page 67 and 68:
Chapter 3: Public Administration Re
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
4. PUBLIC FINANCIAL MANAGEMENT AND
Page 77 and 78:
Chapter 4: Public Financial Managem
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87:
Page 90 and 91:
72 Chapter 5: Public Investment Pla
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 99 and 100:
6. BEYOND THE NATIONAL BUDGET: FISC
Page 101 and 102:
Chapter 6: Beyond the National Budg
Page 103 and 104:
Page 105 and 106:
Table 6.2. Montenegro: Characterist
Page 107 and 108:
Page 109:
Page 112 and 113:
94 References Langseth, Peter Jerem
Page 114 and 115:
96 Annex 1 Indicator 2001 2002 2003
Page 116 and 117:
98 Annex 3 ANNEX 3. COSTS OF ALTERN
Page 118 and 119:
100 Annex 4 Local roads planning, f
Page 120 and 121:
102 Annex 4 with EU standards and d
Page 122 and 123:
104 Annex 4 Most of the railway’s
Page 124 and 125:
106 Annex 4 C. Public Expenditure o
Page 126:
108 Annex 4 Table A4.6. Transport i
show all

Republic of Montenegro: Public Expenditure and ... - Vlada Crne Gore

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?