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Assessment in the Municipality of Fier

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Assessment in the Municipality of Fier PUBLIC EXPENDITURE AND FINANCIAL ACCOUNTABILITY Assessment in the Municipality of Fier PEFA-Assessment in the Municipality of Fier The quality assurance process followed in the production of this report satisfies all the requirements of the PEFA Secretariat and hence receives the ‘PEFA CHECK’. PEFA Secretariat, May 10, 2017 1 ACKNOWLEDGEMENTS Prepared for the United States Agency for International Development, USAID Contract Number AID- 182-C-12-00001, Albania Planning and Local Governance Project (PLGP) This assessment report was prepared by: John Wiggins International Public Finance Management Consultant Elton Stafa Public Finance Management Expert Co-Plan, Institute for Habitat Development Merita Toska Public Finance Management Expert Co-Plan, Institute for Habitat Development Tetra Tech ARD Home Office Address: Tetra Tech ARD 159 Bank Street, Suite 300 Burlington, Vermont 05401 USA Telephone: (802) 658-3890 Fax: (802) 658-4247 www.ardinc.com Tetra Tech ARD Contact: Adrienne Raphael, Senior Technical Advisor/Manager [email protected] PLGP contact: Kevin McLaughlin, PLGP Chief of Party [email protected] The assessment team is grateful to Fier Municipality and its officials for their ready and patient cooperation in providing all the information needed for the production of this Assessment. We are grateful in particular to the Mayor, Mr. Armando Subashi, the Administrator General, Mr. Florjan Muçaj, Ms. Enkelejda Peshkëpia, Ms. Evrinomi Zhezhi and Ms. Dorela Dollakaj for their support and coordination of the entire process within the municipality. About the USAID Planning and Local Governance Project USAID’s Planning and Local Governance Project in Albania (PLGP) works both at the national policy level and at the local level to promote acceptance of the principles of decentralized governance, and to disseminate and institutionalize practical and effective methods and techniques for municipal management. The PLGP ‘partner’ local self- government units after the Territorial and Administrative Reform include: Tirana, Durres, Fier, Lushnje, Berat, Kuçova, Patos, Vlora, Saranda, Elbasan, Korça, Vora and Kamza. The program works in four main areas: SUPPORT THE GOVERNMENT OF ALBANIA TO DRAFT AND IMPLEMENT EFFECTIVE DECENTRALIZATION POLICIES AND LEGISLATION The Project assists the Government of Albania (GOA), local government representatives, and relevant NGOs/municipal associations to make informed decisions based on inclusive consultations/broad consensus on the policy development framework for effective decentralization such as the Territorial and Administrative Reform, the National Cross- Cutting Strategy on Decentralization and Local Governance 2014-2020, the Law on Local Self-Government, the reformation of the unconditional grant system and the development and discussion of the first-ever comprehensive law on local government finances, aiming at a more equitable distribution of resources and improved delivery of services;. PLGP continues to promote an inclusive dialogue and help building a bipartisan consensus on issues of strategic importance to local self-governments and the citizens of Albania. IMPROVE LOCAL GOVERNANCE PLGP provides technical assistance and on-the-job training to staff in the 13 consolidated partner municipalities to improve the efficiency of their management systems and service delivery operations. A special focus is given to information and communication technology (ICT) helping building e-government solutions that enhance both local operational efficiency and public administration modernization. The program assists partner local self-governments to improve tax collection by addressing systemic weaknesses of tax administration; develop alternative methods to increase own-source revenues; better manage assets under local government jurisdictions; and ensure the predictability, sustainability and transparency of local government budgetary processes. It assists the selected local self-governments in raising citizen awareness of local government functions, enabling the exercise of citizen rights and responsibilities, and citizen participation in local government decision-making. IMPROVE MANAGEMENT OF LOCAL SERVICES PLGP assists the GOA and local governments in ensuring that laws, policies, procedures, and services such as water, wastewater, and solid waste management are consistent with EU standards and environmental standards in particular. It assists selected local governments, and supervisory boards, in developing skills, defining roles, and building knowledge needed to effectively manage and oversee jointly-owned utility companies dealing with these services. ASSIST THE GOA AND LOCAL GOVERNMENTS TO PLAN AND MANAGE URBAN AND REGIONAL GROWTH PLGP provides technical assistance to the GOA and selected local governments in developing skills and knowledge to draft territorial plans in accordance with the Law on Territorial Planning. It provides technical assistance to the National Territorial Planning Agency to develop a conceptual framework for the National Territorial Plan in accordance with the Territorial Planning Law and implementing regulations. Citizens, civil society groups, businesses, and other NGOs will be provided opportunities for increasing their participation in and oversight of territorial planning. 1 Contents Executive Summary .......................................................................................................... 7 Chapter 1 Introduction ................................................................................................... 10 1.1 Rationale and purpose .................................................................................................. 10 1.2 Assessment management and quality assurance ......................................................... 11 1.3 Assessment methodology ............................................................................................. 12 Chapter 2 Background information ................................................................................. 15 2.1 Country economic situation .......................................................................................... 15 2.2 Fiscal and budgetary trends .......................................................................................... 17 2.3 Local Government Structure ......................................................................................... 18 2.4 Fier Municipality ........................................................................................................... 21 2.5 Legal and regulatory arrangements framework for PFM ............................................. 24 2.6 Institutional arrangements for PFM in Fier .................................................................. 26 Chapter 3 Evaluation of PFM systems, processes and institutions.................................... 29 3.1 Subnational PEFA indicator HLG-1: Transfers from a higher level of government ...... 29 3.2 Pillar 1. Budget Reliability ............................................................................................. 33 3.3 Pillar 2. Transparency of Public Finances ...................................................................... 40 3.4 Pillar 3. Management of Assets and Liabilities ............................................................. 49 3.5 Pillar 4. Policy Based Fiscal Strategy and Budgeting ..................................................... 55 3.6 Pillar 5. Predictability and Control in Budget Execution ............................................... 64 3.7 Pillar 6. Accounting and Reporting ............................................................................... 80 3.8 Pillar 7. External Scrutiny and Audit ............................................................................. 84 Chapter 4 Conclusions on the analysis of PFM systems .................................................... 87 4.1 Integrated analysis of PFM performance ..................................................................... 87 4.2 Effectiveness of the internal control framework .......................................................... 90 4.3 PFM strengths and weaknesses .................................................................................... 91 Chapter 5 Government PFM reform process ................................................................... 93 5.1 Approach to PFM reform .............................................................................................. 93 5.2 Institutional considerations .......................................................................................... 93 Annex 1. Performance Indicator Summary ...................................................................... 94 Annex 2. Summary of observations on the Internal Control Framework ........................ 101 Annex 3A. List of documents consulted ......................................................................... 103 Annex 3B List of people interviewed ............................................................................. 104 Annex 3C Sources of information for each Performance Indicator ................................. 105 Annex 4. Disclosure of quality assurance arrangements ................................................ 106 2 Abbreviations ALL Albanian Lek APP Public Procurement Agency CA Contracting authority CHU Centralized Harmonization Unit COFOG Classification of Functions of Government DLDP Decentralization and Local Development Program EU European Union FMC Financial management
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