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20 Proposals for Transparency and Accountability at the Local Level

Essential reform of local self-government financing requires more frequent informing and reporting, through reporting to councillors about budget execution, regularly publishing analytical cards, audit reports and stricter penaltie provisions.

Institute Alternative addressed written comments and proposals to the Ministry of Finance within public consultations, in order to improve Draft Law on Local Self-Government Financing.

The main issues of the Draft Law are regarding lack of solutions that would increase transparency and accountability of local governments in managing citizens’ money.

Among other things, we proposed improving the use of funds from the current and permanent budgetary reserves, with prescribing limits in which these budget lines are allowed to move, as well as mandatory reporting to the public on all transactions.

A particular problem is temporary financing, which is allowed during the first three months of the year, if the local self-government do not adopt the budget decision on time. However, many municipalities are “breaking through” this three-month deadline. That is why we have proposed the obligation to report on consumption in the period when the municipality has not adopted budget decision. It is also necessary to introduce special restrictions regarding the borrowing and use of the budgetary reserve in this period.

The proposed legal solutions envisage the creation of a “revolving” fund, with purpose to create opportunities for municipalities to prefinance projects from donor founds, in the form of loan. But, the obligations of municipalities to report on consumption of these funds are not required, nor is provided protection for inappropriate use of donors’ funds or delays in carrying out supported activities. State should not be in a position to cover errors in the implementation of projects and ensure the return of its funds.

External auditing report must be submitted, beside Municipal Assembly, to the Ministry of Finance and State Audit Institution as well. Ministry supervises the legality of the work of local self-governments in implementation of the Law on Local Self- Government Financing and State Audit Institution audits final account of the municipality’s budget.

Current Draft Law does not envisage any form of informing the Municipal Assembly about budget execution during fiscal year to which the budget refers, which means that neither councilors nor the citizens have information on budget execution through the year.

In order to encourage the development of internal audit and increase its impact at the municipal level, we propose to introduce the obligation of submitting the internal audit report to the Municipal Assembly.

Particular attention was devoted to the penal provisions, which are considerably lower than the maximum amount stipulated by the Criminal Procedure Code. In addition, provisions do not include domain of budget rebalance, allocation, use of the current budgetary reserve, state-owned enterprises and public institutions reporting, as well as other types of borrowing.

Municipalities must be obliged to use their websites, to make important budget documents easily accessible to their citizens. In this regard, it is necessary to oblige municipalities to continuously publish analytical cards, and not only in periods of elections.

Institute Alternative within “Money Watch – Civil Society Guarding the Budget” project financially supported by European Union in cooperation with partners, is preparing a report on public finance management at local level, with a particular focus on the openness of local budgets.

Institute Alternative Team

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How much revenues – thus much responsibilities

Reaction of Coalition KUM to the draft Law on Local Self-Governments Financing

Coalition for transparency and fight against corruption at the local level (KUM) commends decision of the Government of Montenegro to finally systematically deal with local finances via new Law on Local Self-Government Financing, but warns that the draft that is currently up for a public discussion will not significantly improve the level of transparency and responsibility of municipalities towards citizens’ money.

Namely, the draft Law has remedial nature that reflects in transferring a part of revenues to municipalities. However, it does not deal with substantial problems that prevent financial stability of municipalities: irrational spending and problems on expenditure side.

Coalition for transparency and fight against corruption at the local level (KUM)
Coalition for transparency and fight against corruption at the local level (KUM)

Draft Law continues to confirm privileged treatment of the Capital City and the Old Royal Capital in regards to amount of part of revenue on personal income which belongs to them, although Cetinje has its own multi-million development fund, and Podgorica has already an opportunity to collect higher revenues than all others. On the other hand, revenues of municipalities which belong to the coastal region, which also have problems with financial stability, and some of them are beneficiaries of the Equalisation fund, will be reduced for approximately 3,6 million EUR due to change that revenues as per compensation for utilisation of coastal zone should in their entirety be a revenue of the Public Enterprise for Coastal Zone Management of Montenegro.

Changes in the manner of allocation of funds from Equalisation fund may be able to reduce injustice and favouring of certain municipalities, but draft law does not go into details of utilisation of these funds, which instead of stimulus for development and overcoming underdevelopment still remain a revenue for patching up budget holes.

Norm that the right to withdrawal of funds from the Revolving fund, which is to be established, has municipality which signed contract on project implementation with donors or leading partner, should acknowledge also other modes occurring in the practice, such as pre-contract, decision on approval of funds for project implementation and similar.
On the other hand, draft does not contain more significant novelties in regard to accountability and transparency. Introduction of penal provisions is rendered meaningless if supervision over implementation of laws is left as a responsibility of non-existent budget inspection of Ministry of Finances.

This testifies that Ministry of Finances gave in under pressure of local self-governments which wish to resolve all problems with financial stability by new cession of revenues from central level, with no further efforts to collect source revenues, with no responsibility towards their citizens regarding the manner of spending of their money and with no intention to rationalise expenditure.

Coalition KUM points out that Draft Law on Local Self-Governments Financing will not achieve greater level of responsibility of municipalities or more rational management of the money that they already have, nor will it resolve black holes in data accessibility and transparency of operation of municipalities, neither of institutions and public enterprises at the local level. With no reforms in the manner in which municipalities spend the money, accompanied with strong and effective control mechanisms, there will be no financial sustainability either, no economic progress, and thus, no balanced regional development.

Coalition for transparency and fight against corruption at the local level (KUM) is comprised of 15 CSOs as follows: Centre for Civic Education (CCE), Centre for Monitoring and Research (CeMI), UL-Info from Ulcinj, Institute Alternative (IA), Za Druga from Petrovac, Centre for Development of Non-Governmental Organisations (CDNGO), Juventas, Bonum from Pljevlja, Active Zone from Cetinje, Democratic Centre of Bijelo Polje, Centre for Investigative Journalism of Montenegro (CIJ MNE), Union of Medical Doctors of Montenegro, Centre for Security, Sociological and Criminological Research ‘Defendology’ from Niksic, Monitoring Group Ulcinj – MogUL and Centre for Political Education from Niksic. The Coalition was formed within the framework of project ‘Let’s Put Corruption into Museum’, implemented by the CCE in cooperation with partners and with the support of EU Delegation to the Montenegro.

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IA in the Public Finance Management Dialogue

We participated in the first Public Finance Management Dialogue (PFM) and presented our key recommendations in this field.

Stevo Muk, President of the Managing Board of the Institute Alternative, presented our comments on the implementation of the Public Finance Management Reform Programme. He said that the implementation rate of the reform programme was poor, with only 39% for 2017. As a cause of delay, there is a slowdown in starting major projects supported by the EU. “In the objectives related to the Audit Authority, state aid, revenue collection, etc. – the European Union projects await for almost all of that. Government efforts to achieve the objectives of this programme – improving the state of public finances, fiscal sustainability and proper management of public finances – cannot depend solely on donor support, as the Government has a responsibility towards citizens to address these problems. “

 Findings of the Institute Alternative indicate that there is no progress even in the area of transparency of the capital budget. Budget inspectorate has not been functional for three years and the Government is persistent in declaring this entire budget line, related to discretionary spending of money, as secret.

“A quarter of the public procurement budget is shared by only 25 enterprises, and the average number of bidders is still low. The Tax Administration uses every opportunity to declare information on its domain as “tax secret”, such as information on how local governments fulfill their obligations under the tax debt rescheduling agreement,” Muk said.

He emphasized that the State Audit Institution is run by political party personnel who abuse their position and cause great damage to the institution, which cannot be corrected by “cosmetic” activities such as memorandum of cooperation with other institutions and new strategic documents.

The Institute Alternative is implementing the project “Money Watch – Civil Society, Guarding the Budget” with the financial support of the European Union. The project’s major component is independent monitoring of the 2016-2020 Public Finance Management Reform Programme. In the following period, we will continue to monitor how the institutions manage the money of citizens of Montenegro.

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Institute Alternative at the ODIHR human rights event

Aleksandra Vavić, Public Policy Researcher at Institute Alternative, participated in the annual meeting on human rights, organised by ODIHR (Office for Democratic Institutions and Human Rights) and presented key issues concerning public assemblies in Montenegro.

Roundtable “Promotion of Police Security for Free Assembly in Accordance with Human Rights in Western Balkans” presented problems and good practices in public assembly domain, what are the result of years of research led by the European Centre for Non-Profit Law and implemented by civil society organisations in the region, including Institute Alternative for Montenegro.

Photo: OSCE/Piotr Dziubak

The biggest common issue in all Western Balkan countries regarding public assemblies is the lack of a secure police accountability system. Aleksandra added that last year, in 2017, Ministry of the Interior announced changes in the Law on Public Assemblies to ban assemblies on the roads, which Institute Alternative strongly opposed.

“Amendments to the law, as they were announced in the media, would introduce an absolute ban on peaceful public assemblies in certain locations, and therefore rights would be endangered. One of the key goals of public assemblies is to deliver a message to government institutions, specifically targeted person, group or organisation. Therefore, it is the privilege of the citizens – organisers to decide which location will best suit the purpose of the assembly, and the competent authorities should not impose an absolute ban. On the contrary, deleting the provisions on absolute prohibitions is a recommendation that has addressed to countries which have such provisions in the law for years”, Aleksandra explained.

General uncertainty and inconsistency in policy-making contributes to poor legal framework that allows public discussions in the field of security and defense to be optional. “The issue of public assemblies in Montenegro is still more a question of security, not human rights, so our fear of some new prohibition and non-transparent changes is justified,” she added.

The Human Dimension Implementation Meeting is the largest European conference dedicated to human rights. This year it was held in Warsaw, and the organisation of the round table was provided by the OSCE Mission to Bosnia and Herzegovina, Office for Democratic Institutions and Human Rights, European Centre for Non-profit Law which runs the project “Monitoring Right to Free Assembly” with the support of the Swedish International Development Cooperation Agency (SIDA).

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You4EU – Citizen participation 2.0

Institute Alternative with the support of “Europe for Citizens” Programme of the European Union implements the project “YOU4EU – Citizen Participation 2.0”. The aim of the project is to encourage citizens in Europe to take part in decision and policy – making processes.

Citizen participation in decision and policy – making processes is one of the main pillars of democracy and democratic culture in societies where citizens have power to be agents of change and have right to take part in debates about problems that occur in societies and take decisions on policies of public interest.

Thus, this project is designed to motivate citizens to participate in dialogues with stakeholders at both EU and national level. The project is following up the positive momentum of revived debate over the future of the EU initialised in 2017 and important events, such as Brexit, 2019 European Parliament elections and published Strategy for credible enlargement perspective for the Western Balkans countries. The Project activities will help citizens to grasp ideas and think about possible scenarios of the EU future presented in the European Commission’s White paper on the future of Europe. Facilitation of direct contacts between citizens and decision makers that will take place during this Project will also encourage citizens to express their own concerns over particular problems and define the issues which should enrich, shape and strengthen the EU agenda in the upcoming period. Together with this the project activities will provide the opportunity to citizens to challenge and discuss presented EU agendas and articulate criticism over the concrete EU activities and results.

Given that the two organisations that participate in the project come from EU candidate countries, while two come from EU member states, an important aspect of this project is the exchange of experiences between EU citizens and citizens of Europe who has the potential to results in constructive action to strengthen social and political cohesion on the European continent.

The project will use and support the enhancement of new media and new channels of communication in order to raise interest and include young people in above mentioned processes.

An additional contribution will also be given to the research that the project partners will implement in 4 partner countries and involve more than 300 citizens. The aim of the research is to examine the available channels of communication between citizens and public authorities, as well as to provide recommendations for more active citizen participation in debates concerning the future of Europe. This research will be conducted in three phases:

–  The first phase involves the collection of citizens’ questions through social networks, existing and new online platforms. Citizens will have the opportunity to ask the public officials about the future of Europe, and the researchers will do their best to come up with an answer. Participants or moderators will include candidates for the European Parliament in the 2019 elections, representatives of states in the EU, and members of the negotiating teams of the candidate countries. Topics covered by these debates concern current issues – EU enlargement, Brexit, the state of four freedoms, European Parliament elections, European citizenship, and more.
– Based on the issues raised in the first phase, the second will create a questionnaire for decision-makers in both EU Member States and candidate countries.
– The final phase of this research involves the writing of an analytical study composed of 50 key issues for the future of Europe, which will be presented to decision makers at the EU level.

The project’s priorities are to encourage citizens to engage in active dialogue on the future of Europe and to review mechanisms to counter the rising Euro-skepticism in, and outside the European Union.

General aim of the project is to shift the position of European citizens from passive actors to agents of change.

Specific aims of the project are to:

  • Shift position of European citizens from passive actors to agents of change, empowered and encouraged for democratic and civic participation at the Union level;
  • Develop understanding of citizens’ role and possible impact in the EU policy making process;
  • Enrich civic debate and e-participation of citizens on key developmental policies of the EU;
  • Enable exchange of experience between EU Member and Candidate Countries.

The project consists of interrelated set of activities which enable: a) direct contacts between citizens and decision makers for discussing contemporary challenges and perspectives of EU policies from citizens’ point of view; b) Europe-wide research on the citizens opinion over the future EU agenda; c) transnational multi-stakeholder debates on how to use concrete EU achievements and benefits in order to reinforce the EU’s social and political cohesion, and d) development of innovative instruments for direct participation in decision making for citizens by citizens.

Expected results:

  • European citizens empowered and motivated to lead debates;
  • Developed recommendations for improvement of particular aspects of EU policies;
  • Broadened potential impact of individual initiatives;
  • Increased pull of knowledge, know-how and good practice for combating Euroscepticism.

Project activities are going to be implemented in four phases:

1. The initial phase includes the development of the flow of project activities and the establishment of work methodologies, the distribution of activities between partners and the determination of administrative rules.
2. The research phase involves collecting citizens’ questions through social networks, creating questionnaires and a policy study that will cover the 50 most frequently asked questions and the most important issues of citizens.

3. The participation phase present the organisation of online competition at the European level, in which participants will be able to propose an innovative tool that will in some way contribute to the involvement of citizens in decision-making processes and discussions on the future of the European Union.

4. The last phase – the debate phase refers to the organization of four debates in Montenegro, Slovenia, Croatia and Serbia, and one in Brussels, where the results and contributions of the project will be presented.

Four partners are included in project implementation: Institute Alternative, Belgrade Open School from Serbia as a leadership partner of the project, GONG from Croatia and PiNA from Slovenia. Project will directly include between 700 and 800 participants. Indirectly, around 370.000 citizens will be included and informed about the results of the project.

The Project is going to be implemented during the period of 18 months, from 1st of September 2018 until 29th of February 2020.

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Where is the Protector in discussion about the future of Airports?

Given the relevance of the issue and the amount of the proposed concession arrangement, the competent ministry should request the advisory opinion of the Protector of Property and Legal Interests of Montenegro, which should take part in discussion on the future of the Airports of Montenegro.

During the public presentation of procedure for awarding a concession for management over the Airports of Montenegro, we had an opportunity to hear opinions of a private law office on compliance of the proposed concession with the existing legal framework.

However, as in the other legal and property issues of great public interest, we have not heard the legal opinion of the Protector of Property and Legal Interests of Montenegro.

In the publication „What does the Protector protect?“ Institute Alternative has earlier pointed out that the position of this institution is not at the appropriate level. At the time, highlighted that the consultative role of the Protector is not developed enough and that this institution has a prominent role only after the damage to the budget has occurred.

Considering the importance of the future of the Airports of Montenegro and the great public interest which proposed concession arrangement provoked, we invite Ministry of Transport and Maritime Affairs to request and publish the Protector’s opinion on this issue. Also, the institution of the Protector should present its opinion at a consultative hearing in the Parliament of Montenegro.

The engagement of private consultant firms so far has significantly jeopardized the transparency of data, which served as the basis for the concession act. Without full insight into the relevant expert opinions, the public can not form an evidence-based stance on this issue. Hence, organising public discussions without the possibility for the interested citizens to participate on equal footing does not make much sense.

The Law on State Property provides an opportunity to all state authorities to seek the opinion of the Protector of Property and Legal Interests. Therefore, it is unclear why private law offices are prioritized over public institutions funded by the taxpayers’ money.

The Protector should be one of the strongest mechanisms in the protection of legal and property interests, but its work is still poorly regulated. Although under the jurisdiction of the Ministry of Finance, this institution is neither Ministry’s organisational unit nor it enjoys the necessary degree of independence.

Even though the Government adopted yet another conclusion to urgently start drafting of the Law on the Protector of Property and Legal Interests in March this year, after adopting a similar conclusion year earlier, specific law which would regulate this important area is still lacking.

Institute Alternative Team