The Law on Budgets is one of the key laws that regulate the management of public finances, their planning and the manner of controlling public money. The Draft Law on Budgets is a document that the Ministry of Finance has been working on for the last 5 years and it has finally been made public. Encouraged by the importance of the law, but also by the lack of public information about the Law, the Foundation Open Society – Macedonia (FOSM) and the Association for Research and Analysis ZMAI (ZMAI) organized a discussion on the Draft Law where the professional public and media will be introduced to the text of the Law and will have the opportunity to contribute to its improvement.
The discussion was attended by the Deputy Minister of Finance, Dimitar Kovacevski, PhD, who for the adoption of this Law pointed out that in order to achieve efficient, transparent and modern management of public finances, the Government implements the Public Financial Management Reform Program, to promote in certain areas of public finance: revenue administration and collection, fiscal forecasting, budget preparation and execution, public procurement, debt management, public internal financial control and external audit.
“The current Law on Budgets from 2005, with several additional amendments, regulates the procedures for preparation, adoption, and execution of the Budget of the Republic of North Macedonia and the budgets of the local self-government units and the City of Skopje, as well as reporting on budget execution. which in turn are not in line with new trends, recommendations of international institutions and directives of the European Union. For these reasons, the Ministry of Finance saw the need to draft a completely new law. I would like to emphasize that improving the management of public finances and strengthening the medium-term budget planning is one of the biggest priorities of the Government of the Republic of Macedonia in the process of accession to the European Union. In addition, the new draft Law on Budgets is in line with EU directives and the commitment to improve the public financial management system, in order to provide a framework for conducting sound, predictable and sustainable fiscal policy and increase budget discipline and accountability. “- said Kovacevski.
Viktor Mitevski, President of ZMAI and former advisor to the Minister of Finance gave a detailed overview of the key components of the Law. According to Mitevski, the adoption of the Law is a positive step towards improving the public financial management system, and the presence of the Deputy Minister of Finance in this discussion only shows the will to involve the professional public in improving the text of the Law. In addition to the positive aspects of the Law, Mitevski stressed that the Draft-Law has ambiguities and additional harmonization with the European principles for public financial management is needed.
“The fact that this text of the law contains an article governing fiscal principles is to be welcomed, but it is important to emphasize that the proposal does not contain a full and comprehensive definition of fiscal rules that should ensure a stable and sustainable public finance system,” Mitevski said. He added: “The adoption of the Law on Budgets must be accompanied by the adoption of a number of bylaws and of course the establishment of an integrated information system that will enable full implementation of the Law.”
Regulating transparency in the planning and spending of public money is an important element of the Draft Law on Budgets. Fani Karanfilova-Panovska, Executive Director of the Foundation Open Society-Macedonia, said that the involvement of the public in the process of planning the budgets of the ministries is one of the key segments for creating a budget that will reflect the needs and requirements of citizens. However, the provision that provides for each ministry and municipality to establish a mechanism for consultation with its stakeholders and citizens needs to define more precisely the “mechanisms” that budget users will need to establish independently. If budget users are left to fully define the mechanisms themselves, it is very likely that this provision will be seen primarily as an opportunity to meet their own goals and interests, and not as a tool for citizen involvement. Karanfilova-Panovska stressed that “In this way, the institutions will be obliged to take into account the needs of the citizens and to involve the citizens from the very beginning when creating the budget circulars.” She also added that a major shortcoming in the Draft Law is the ambiguity about the composition of the Fiscal Council, i.e. the Council, in addition to representing the professional, academic and professional public, should also represent the civil sector. Hence, when defining the criteria for members of the Fiscal Council, some of them should be arranged regarding the necessary education and professional knowledge which should be with proven experience of the civil society.
The participants agreed that the Law on Budgets is of exceptional importance and the decision for its adoption is to be welcomed, but they also gave their views on how the proposal of the Ministry can be improved. The civil sector and the professional public hope that their proposals will be taken into account in the adoption of the Law and appealed for its immediate adoption in order for the process for planning the Budget for 2022 to be in accordance with the new legal solution. The representatives of ZMAI and FOSM, organizers of the public debate, emphasized that this Law will lay the foundation for better planning and execution of all future Budgets of the state and municipalities.
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2 November 2020