Posted on

Reform of public financing and tax secrecy: through the lens of municipal debts

This study examines the tax arrears of 16 Montenegrin municipalities in the context of increasing the efficiency of collection of tax arrears and ensuring more transparent financial reporting, which are the main goals of the 2016-2020 Public Finance Management Reform Programme. Municipal debts account for 40 percent of total tax arrears. These arrears are managed through a debt restructuring programme concluded between the Ministry of Finance and all legal and natural persons that owe taxes to the state. For this reason, important aspects of the overall public finance reform in Montenegro can be assessed through the lens of municipal debt management.

In 2015, in response to high levels of indebtedness of local self-governments Ministry of Finance concluded individual contracts with local selfgovernments to define the terms for the settling of EUR 90 million in arrears on tax payments and payments of social security contributions for employees of local self-governments. Among other, these contracts obliged local self-governments to reduce the number of employees in local government bodies, public institutions, agencies and municipally owned enterprises. Nevertheless, out of the 16 municipalities that signed such contracts, seven failed to live up to this obligation.

According to the Tax Administration, 95.15% of reprogrammed liabilities of local self- governments have been collected. The Tax Administration does not, however, provide breakdown of repayments by municipality, and maintains that such information is regarded as a tax secret. Refusing information on grounds of tax secrecy has become possible in the wake of the May 2017 amendment to the Law on Free Access to Information, which has thus directly undermined the transparency of public finances and with it the accomplishment of objectives laid out by the Public Finance Management Reform Programme.

Posted on

Infographic: 150 million euro for only 25 companies

We prepared an infographic on the public procurement spending in 2017.

Data from the Public Procurement Administration’s Report for 2017 show that in that year, spending for public procurement exceeded half a billion euro and that less than 1% of the bidders earned 1/4 of that money.

Check out the other interesting data in the infographic bellow.

Posted on

Coalition “Cooperating Towards Goal”: Government to Enable Co-financing of the EU Projects

Coalition “Cooperating Towards Goal” calls upon the Ministry of Finance and the Government of Montenegro to urgently fulfil their legal obligations and adopt the Decree on co-financing of the EU projects for national non-governmental organisations. The state made a commitment to support NGO projects that have been selected through demanding and complex EU tenders, taking into consideration that EU grants require co-financing from each beneficiary.

The Ministry and the Government had to meet this obligation immediately after the entry into force of the Amendments to the Law on Non-Governmental Organisations, in January 2018. The draft Decree was put up for public discussion in July 2017, which means that the text of the Decree has been finalised and that there is no reason, except potentially a political one, for its adoption to be postponed for so long.

However, even six months after the entry into force of the Law, the Ministry and the Government have not adopted the bylaw regulating co-financing which is necessary for the Law to be applied completely. With this, the Government directly jeopardises successful implementation of these projects and leaves uncertainty in regard to the necessary co-financing for non-governmental organisations.

We recall, all projects supported by the EU in Montenegro trough calls for NGOs proposals are related to solving key issues in the area of the rule of law and human rights in Montenegro, which are, at least declared, priorities of the Government. Importance of reforms in these areas has been clearly underlined by the European Commission in the latest Report on Montenegro, where expectations of concrete results in the rule of law and the protection of human rights are clearly stated. It is therefore necessary for the Government to recognise significance of these projects, and enable their full realisation and impact on reforms in these key areas through their co-financing.

Therefore, we expect the Government to adopt the Decree as soon as possible, given it was obliged to do this almost six months ago. If the Government continues to be reluctant when it comes to adopting the Decree, it will leave space for suspicion that the Government does not intend to provide the support for NGO projects at all. This would be a clear sign that the matter at hand is of political nature, and that the laws in this country are not mandatory for those who create them.

NGOs Coalition “Cooperating Towards Goal” currently brings together 99 non-governmental organisations from all over Montenegro and represents the largest organised coalition of NGOs in the country.

Ana Novaković, President of the Managing Board

Posted on

Five Stars for Institute Alternative: Amongst the Most Transparent in the World for the Fourth Time

In the report published today, Institute Alternative received five stars for transparency, along with the Center for Democratic Transition (CDT) and the Center for Research and Monitoring (CeMI). Once again, we found ourselves in the company of renowned think thanks around the world, such as Amnesty International, Bruegel, Freedom House and others.

“Transparency continues to matter”, Transparify states in its report, highlighting that the governments around the world are putting think tanks (and civil society organisations more broadly) under pressure.

Think thanks are rated based on the extent to which they publicly disclose where their funding comes from. Organisations rated with 5 stars provide the public with clear information about donors, funding amounts and particular projects and as such can serve as an example to which other organisations and administration can look up to.

The five-star reassessment is another indicator of the quality of our work and the values that guide us in our work and which we require from others – transparency and integrity primarily.

Recognition of our transparency in the time when sources of funding and nature of the functioning of the non-governmental sector in Montenegro are being manipulated presents a special confirmation and acknowledgment.

We recall that non-governmental organisations from Montenegro have achieved remarkable results since the first year of the implementation of this assessment and all reports mention Montenegro as a country that has a significant number of transparent think thanks in proportion to its size.

“Reflecting their strong representation among the think tanks we engaged with in the past, 14 of the highly transparent think tanks are based in the United States, and 13 in the United Kingdom. In Ukraine we found six think tanks that are 5-star, in Georgia five, in Canada four, in Belgium and Montenegro three, in Sweden and Norway two each”, reads the report.

Transparify is an international initiative that promotes transparency in public policy research.

Institute Alternative Team

Posted on

Draft Law on State Administration: Less Control and Transparency

Current Draft Law on State Administration removes obligations of the state administration towards the Parliament, thus limiting its control function; the Draft is not harmonised with a number of other regulations.

In our comments provided during the public discussion, we warned of the inconsistency of the proposed solutions with Rules of Procedure of the Parliament of Montenegro.

While the Rules of Procedure prescribe that MPs are entitled to access all relevant official materials, documents and data that are prepared or collected in the committees or the Service of the Parliament, the Government, ministries and other state administration bodies, the Draft Law proposes that ministries submit requested records and documents to the Parliament only within the framework of parliamentary investigation.

By reducing availability of information and documents on the work of ministries that can be submitted to the MPs for review, the scope of the Parliament`s control function is reduced. Hence, we propose the current MPs’ rights to be additionally prescribed by the new Law on State Administration, by specifying the obligation of the ministers and heads of state authorities to provide the necessary information to the MPs, in accordance with the Parliament act.

Although it is commendable that this Draft Law introduces for the first time an explicit obligation to publish a consolidated version of the regulation, in one part it limits the scope of information that authorities have to proactively publish pursuant to the Law on Free Access to Information.

Namely, in addition to consolidated versions of regulation, the Draft obliges state administration bodies to publish strategies, work programs, work reports and other strategic documents, organigrams and contact data of management personnel, and information on services i.e. a link to information on services. The Law on Free Access to Information, on the other hand, obliges all authorities to publish twelve information items, including employee lists and public payroll information.

For this reason, we have suggested that, due to the competence of the Agency for Personal Data Protection and Free Access to Information to inspect the proactive disclosure of information, the obligation to publish the final consolidated versions of regulation should be further defined by a special law on free access to information and adequate sanctions should be prescribed if the state administration bodies do not abide by these obligations.

Tendency to make state administration bodies obliged to provide information on services is also positive, and it could be an introduction to making the catalogue of services that Institute Alternative advocates for. However, the Draft relativizes this tendency by the possibility of publishing only a link to the eUprava portal. Leaving such alternatives is not good, especially since all services need not be converted into electronic format.

Our proposal is to explicitly prescribe the obligation to make, publish and update the catalogue of all services provided by a state administration body, regardless of whether they are available in electronic or other format.

We also consider that the Law on State Administration should set deadlines for providing feedback to citizens who address state administration bodies. It is also necessary to establish the obligation of the body to forward received request to a competent body and inform applicants about it, within shorter deadline, when not competent.

Institute Alternative Team

You can download our proposals for the Draft Law on State Administration here.

Posted on

Behind the Numbers – Overview of the Results of the Special Fight against Organized Crime and High-Level Corruption

In Montenegro, there has been a special prosecution office for organized crime, corruption, terrorism and war crimes, in different formats for last fourteen years. The Department for Suppression of Organized Crime, as part of the Supreme State Prosecution Office, started working on June 30, 2004. Since then, the Department and the related government bodies responsible for suppression of organized crime and corruption have been in a continuous process of reform under the supervision of the European Union.

During this period, the jurisdiction of the Department was expanded in 2008 to include corruption, terrorism and war crimes and therefore the number of special prosecutors increased; the new Criminal Procedure Code was adopted in 2010 which introduced prosecutorial investigation; the capacities of Prosecution Office, Police, Customs, Department for Public Revenues and Administration for Prevention of Money Laundering and Terrorist Financing were strengthened; their joint investigation team was formed in 2011. After all this, in 2015, the Special State Prosecution Office (hereinafter: SSPO), modeled after the Croatian “USKOK”, was established and its jurisdictions temporary expanded to include criminal offenses under the Election Law since August 2016.

The aim of this analysis is to contribute to the work of the SSPO and the Special Police Department through analysis of their work and the state in the field of the chosen interim benchmarks and through giving suggestions and recommendations for resolving the problems in their work.