Fiscal Decentralisation Initiative Evaluation and Planning Workshop Evaluation of FDI Impact in the

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Fiscal Decentralisation Initiative Evaluation and
Planning WorkshopEvaluation of FDI Impact in
the Caucasus Region

• Istanbul, November 29-30, 2006
• Vera Kamenickova,
• Statistics, Czech Republic

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1. FDI Fiscal Decentralisation Initiative

• Was found in 1995 in Paris
• Is a demand-driven facility
• Involves a consortium of donors WB, OECD, UNDP,
  USAID, OSI/LGI, and CoE
• Promotes decentralisation in transition
  countries
• Supports consensus building among central and
  local governments
• Facilitates exchange of best practices.

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2. Major activities

• Country or Regional Policy Forums
• Capacity Building Programmes
• Technical Assistance Programmes

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3. Caucasus region

• Three countries involved Armenia, Azerbaijan
  and Georgia
• Declared independence at the beginning of
  nineties
• Devastation by warfare afterwards
• Extensive reorientation of the economy
• Relatively low-income countries
• Serious consequences of the way the former Soviet
  Union controlled these countries (economic,
  social, ethnic, administrative etc.)

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3. Caucasus region cont.

• Public expenditure to GDP share bellow 20
• Tax collection not very effective
• Local government expenditure to GDP around 1
• Self-government relatively new phenomenon both
  at local and regional levels
• Unclear division of responsibilities among
  governmental levels
• Gaps between laws and reality

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3. Caucasus region cont.

• Monopolistic party system and centralised budget
  excluded the need for local initiative
• Cooperation among local authorities at low level
• Unsettled intergovernmental system
• Local dependence on central government grants
• Weak municipalities and regions
• Severely limited local authority property.

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4. FDI programme for Caucasus region - goals

• Increase general awareness of fiscal
  decentralisation among government officials
• Improve institutional and professional capacities
  at local level
• Recommend policies for fiscal decentralisation
  and improve management
• Enable transfer of knowledge from more developed
  transition countries to less develop ones

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4. FDI programme for Caucasus region tools

• Planning workshop for programme implementation
• National workshops - Policy Forums (two
  delivered, one pending)
• Workshop for local government associations
• Regional training programme (being designed)
• International conference
• Master of Public Policy FDI Fellowship 2004/05
  and 2005/06 4 fellowships were granted to
  students from Caucasus.

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5. Main topics of the FDI activities Policy
Forums

• Legal framework for decentralisation
• Territorial re-organisation of local units
• Financial viability and financial management
• Exchange of ideas among national and sub-national
  policy-makers and other stakeholders
• Benefits of decentralisation
• Delivery of public services.

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6. Main topics of the FDI activities Capacity
building

• Academic training in public policy and finance
• Intergovernmental fiscal relations
• Role of local government associations
• policy development,
• information dissemination,
• international cooperation.

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7. Main topics of the FDI activities Technical
assistance

• Financial equalisation mechanism in Armenia
• typology for municipalities
• equalisation formula
• legal and administrative issues in this respect.

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8. Major benefits of the FDI programme

• Creating the opportunity for discussion based on
  experience and gained knowledge
• Bringing countries together (within Caucasus and
  also in a broader sense)
• Bringing people together (national and
  sub-national officials, NGOs, domestic and
  foreign experts)
• Facilitating cooperation, exchange of information
  and of positive as well as negative examples

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8. Major benefits of the FDI programme - cont.

• Disseminating information on the state of
  affairs of fiscal decentralisation in relevant
  countries
• Lessons on team work (different stake-holders,
  including donors)
• Training of trainers
• Incentives for a new literature on fiscal
  decentralisation issues
• Launching the LOGIN network.

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9. Issues to be solved

• Territorial reform (size of municipalities/regions
  , levels of government)
• Strengthen financial position of local
  authorities to be less dependent on central
  government grants
• Legal framework (responsibilities, tax division,
  control mechanism)
• Fiscal equalisation scheme
• Budgeting, reporting, auditing
• Associations of municipalities/regions
  functioning

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9. Issues to be solved - cont.

• Guide for local officials (planning, tax
  collection, property management, public service
  delivery)
• Local service provision (education)
• Data collection
• Debt financing prudent local borrowing
• Delegated versus own local government functions
• Local property management

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