Plans, will and money

Stevo MukStrategies and action plans are passing so that the responsibility is shared (read: non-existing) among different organs, cost estimates are often lacking, and the reporting and coordination are restrictive.

At the end of December 2012, The Parliament of Montenegro adopted the Law on Budget for 2013 year, and at the end of January, the Government adopted the Programme of the Government for 2013. We are preparing a new two-year action plan for the implementation of the Strategy for the fight against corruption and organized crime. This work has involved working group composed of representatives of institutions and organizations which are members of the National Commission for monitoring of the Strategy’s implementation. There was public debate organized about the new action plan proposal.

The working group for Chapter 23 is preparing an action plan for launching the negotiations about the chapter dealing with justice and fundamental human rights. Adoption of this action plan is planned in the second quarter of this year according to the Government’s Work Program. Members of the working group from non-governmental organizations still do not have access to a comprehensive screening report of the European Commission.

The work on a new action plan within the Initiative of Partnership for Open Government is soon to begin. A group established under the Council for Regulatory Reform as a mixed working group of representatives from government and non-governmental organizations will work on it.
Also, the first action plan for the implementation of the measures from the Public Administration Reform Strategy with the accompanying framework action plan will be ready soon.

The body which provides coordination and monitoring of implementation of the Strategy, the Council for Regulatory Reform, has never held a session on this topic, and reports on the implementation of the Strategy are not publicly available.

All these documents tackle common issues and address common questions. How will the work on these documents be completed and complied? What all of these plans can expect from the state budget in 2013? All these questions require prompt response from the Government of Montenegro.

Over the last ten years, Montenegro adopted over forty strategies and action plans. The lack of cost estimates and the lack of identity of sources from which the costs of the implementation of the planned measures will be covered is omnipresent. Strategies and action plans are passed so that the responsibility is shared (read: there is no shared responsibility) among different organs, cost estimates are often lacking, and the reporting and coordination are limited. Hence, too much is left to the good will and sweet wishes. Under pressure from the international community, the EU, the media and NGOs, the strategies and plans more often include more proposals and suggestions of outside actors, but nobody knows who’s going to pay for their implementation and that the actions are thus absent or slow.So next time we’ll probably get the answer that the measures are not implemented because there was no money, for example, for the training of civil servants, training of judges, for creation of software, for database establishment, for register of concessions, etc.
The Government must finally define the structure of the public administration system which will deal exclusively with the coordination of planning, harmonization of strategies and plans, cost estimates for their implementation and identifying of sources of funding for budget implementation, and coordination of donor support to the implementation of national strategies. As the Secretariat for Legislation reconciles legislation, the department for strategic planning in the Government must undertake the harmonization of Government’s plans. That will not happen if the Government’s program indicates one thing and following strategy completely different thing.
At the meetings of the Committee on Budget, Finance and Economy I have spoken on several occasions about the need for the explanation of the budget and projection of costs for the implementation of the current strategy. I conclude that it was a heavy task and obligation for the Government, because in this domain, nothing has changed in recent years.
It’s good that the Development Strategy of Montenegro is being prepared since that Strategy should indicate the Government priorities and the plans about investments of the Government’s money. It is not good that it is written and explained by the party. While preparing its final version, numerous documents which were made in the past should be consulted, especially the unjustly forgotten and expensive study of MASA “Montenegro in the 21st century – in era of competitiveness “.

Stevo Muk
President of the Managing Board

White Paper on Sport

Bijela knjiga o sportu

With the partial support of the Government’s Commission for the allocation of the part of revenues from the games of chance, the Institute Alternative implemented the project “Corruption and Organized Crime in sport” in the second half of 2012.

The project aims to contribute to the fight against corruption and organized crime in sports in Montenegro in accordance with standards and best practices of the European Union and the Council of Europe.

The project consisted of two activities: the research which has resulted with analysis of the risks of corruption in sport in Montenegro and with the translation, printing of the White Paper on Sport of the European Commission (White Paper on Sports), which is distributed to decision-makers in the field of sports in Montenegro.

White Paper on Sport is an initiative of the European Commission, which is for the first time dealing with issues of sport in the EU in a comprehensive manner. Its aim is to give strategic orientation on the role of sport in Europe, to encourage debate on specific issues, to improve visibility in the sports policy making in the EU, as well as to raise public awareness of the needs and characteristics of the sector. The initiative aims at illustrating the importance of issues such as the harmonization of legislation on sport in the EU, and to establish basis for the further development of activities related to the development of sport at EU level.

Social Card in Montenegro

By creating a single database on (potential) beneficiaries of the social welfare system, through the project entitled “Social Card – Social Welfare Information System”, the Government of Montenegro intends to manage funds from the budget in this area more efficiently; to standardise the decision-making procedure in the field of social rights; to minimise abuse and to ensure a more efficient planning of different programmes intended for use by socially vulnerable population. Not only does the success of reorganisation of work of the centres for social work depend on the implementation of this project, but also the entire reform of the social welfare system.

The goal of this analysis is to indicate the expected effects and challenges of establishing a social welfare information system, as well as to provide recommendations for enhancing the realisation of this project, to which the comparative practice of the countries in the region has contributed partially.

Press release: Misdemeanor Accountability To Be Clearly Established

The public debate on the Draft of Law on Budget and Fiscal Accountability is completed and the Law will, if adopted, replace the systematic Budget Law which is currently in force. According to the Draft of Law, misdemeanor accountability is arranged so that numerous actions remained without prescribed penalty. The authority in charge of misdemeanor proceedings has not been established, given deadlines will make that the misdemeanors will be obsolete and will not be processed and certain penalties are too low and will not deter anyone from abusing the public funds.

The novelty of this Draft of Law in the Budget Law in Montenegro is misdemeanor accountability. In that manner Montenegro will cease to be an exception in the region, the only country which in the systematic Budget Law hasn’t defined misdemeanor accountability. The text of the Draft Law uses every possible legal vacuum, in order to prevent determination of misdemeanor accountability for abuse of public funds in practice.

The Draft Law provides penalties for only 8 misdemeanors, while many other actions remain beyond sanctions. The same law in Croatia envisages even 124 misdemeanor actions. Some of the more obvious omissions are related to non- prediction of penalties for breaching the terms of budget preparation and reporting, management of public funds, cash management, loans and guarantees to local governments and enterprises, and so on.

From the penalty provisions it is not clear who will be supervise the implementation of this Act and of misdemeanor proceedings. Such a legal loophole definitely leads to the situation that we remember from the example of the Law on Public Procurement: when the question of jurisdiction for misdemeanor proceedings remains unsolved until the misdemeanor became obsolete.

The Draft Law does not prescribe a maximum period in which the misdemeanor becomes obsolete. This failure to effectively prevent the misdemeanor procedure continues because the most misdemeanors can be learnt only from the final annual account of the budget, and almost a year after the execution of the budget. If the maximum period in which the starting of the misdemeanor proceedings becomes obsolete is not defined, all proceedings will be discarded due to obsolescence.

Even if by some miracle, misdemeanor proceeding occurs only (amazingly low) financial penalties are provided. The proponent has decided to set minimum fines between 200 and 800 Euros, although the Law on Misdemeanors prescribes penalties of up to 4000 Euros for breach in the field of taxation. In addition to cash, it would be effective to predict the so-called measures of safety for particularly serious breaches of important provisions of the law. This would mean that the perpetrators are punished by permanent or temporary suspension from performance in public finances.

In short, the way the misdemeanor accountability is regulated in the Draft of Budget Law will surely prevent that anyone of being liable for systemic breaches of the norms of this systematic legal act. Therefore, it is necessary for proponent to amend the proposed text of the law, or, finally, for the MPs not to allow these solutions to be adopted.

Here you can download IA’s Commentary on the Draft Of Law on Budget and Fiscal Accountability. (only in Montenegrin)

Marko SOŠIĆ
Policy Analyst

Press release: The New Law Should Eliminate Previous Failures

The Draft of Law on Budget and Fiscal Accountability does not contribute sufficiently to the improvement of the budget transparency, to the participation of the Parliament in the budget cycle, to the regulation of misdemeanor accountability, and some of its provisions are directly opposite to the Government’s strategic goals.

During the public discussion on the Draft Law, Institute Alternative prepared its Commentary and sent it to the Ministry of Finance. Our main objections to the Draft of Law are related to the participation of the Parliament in the budget cycle, to the need of strengthening the financial independence of the control institutions, to the tendency of overlapping of the systems of internal control of public finances with the regulation of misdemeanor accountability.

The draft of law does not provide consultation and participation of the Parliament while drafting the Strategy of debt management as well as in the preparation of the capital budget. In order to change this situation, the Government should submit a draft of the strategy and capital budget to the Parliamentary Committee for Economy, Finance and Budget to review it and give opinion.

The dynamics of the submission of key budget documents to the Parliament also remains problematic and prevents the possibility of a thorough analysis of the budget proposal and its implementation by the MPs. MPs do not have enough time to review and approve these documents, since their submission is not prompt. We propose that the deadline for the submission of each of these acts move so that MPs have a minimum of three months to review the budget proposal and to discuss the final account of the budget at the beginning of the third quarter of the year.

Adoption of the new budget is the opportunity to finally establish a system of reporting of the Parliament on the execution of the budget during the fiscal year. Accordingly, the Ministry of Finance should submit each six months a report to the Parliament on the Budget. In that manner, Montenegro would cease to be the only country in the region where there is no practice of semi-annual reporting to the Parliament on budget execution.

Our comments are focused on strengthening the financial independence of the SAI, the Ombudsman and the Agency for the Protection of Personal Data, which is directly threatened by the authority of the Ministry of Finance to carry out the correction of the proposals of the annual budgets of these institutions. Therefore, the new law should empower the Parliament to have a final word in determining these proposals, without the intervention of the Ministry.

Introducing the Inspection, provided by the draft, is in contrary to the efforts of the Government to develop a system of internal financial control in the public sector. Instead of establishing new bodies, it would be more effective to show the Government’s determination to strengthen its internal control system in which the legal and institutional framework has already been established.

Here you can download IA’s Commentary on the Draft of the Law on Budget and Fiscal Accountability (in Montenegrin only)

Commentary on the Draft of Law on Budget and Fiscal Accountability

The Ministry of Finance has prepared a Draft of Law on the Budget and Fiscal Accountability and this text is currently a subject of public debate.

IA considers that this Draft of Law introduces a number of novelties which will improve organic law budget that is currently in force. However, many provisions have remained incomplete, in some areas significant progress has not been made, and some problematic areas are completely ignored.

Specific IA’s suggestions are related to the amendments of the budget calendar in order to allow a more significant role of the Parliament in the budget cycle, non-compliance of the idea of budget inspection with the PIFC concept, the need of introducing the obligation of semi-annual reporting on budget execution, establishment of systemic prerequisites for financial independence of the institutions and bodies, need for more detailed definition of penalty clauses in various aspects, and so on.

IA comments are structured in a manner of following the chapters of the draft of law, citing the concrete article IA had remark on, giving suggestions of its amendment and elaborating it. Although IA used every opportunity to give a concrete suggestion how concrete article should be defined, in a couple of occasions we have emphasized the need of better definition and clarification of some specific questions.

Here you can download IA’s Commentary on the Draft of Law on Budget and Fiscal Accountability (in Montenegrin only)