Improving financial governance in Kosovo
Title: Good Financial Governance in Kosovo
Commissioned by: Bundesministerium für Wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)
Lead executing agency: Ministry of Finance of the Republic of Kosovo
Overall term: 2019 to 2020
One of the main objectives of Kosovo remains EU integration. The Stabilization and Association Agreement that entered into force in 2016 was an important step towards this objective. Accountability, efficiency and transparency of public financial management, which are still having deficiencies in Kosovo, are key requirements for the planned EU sector budget support and important criteria for EU accession candidates. A central problem of all actors in the public finance system Kosovo is the weak joint ownership, which results in the lack of cooperation among the different actors and information sharing between the institutions. The Ministry of Finance (MOF) capacities to provide to the Assembly and the citizens of Kosovo more transparent and comprehensive information on the budget as well as to enhance the budgetary controls need to be strengthened. The Tax Administration (TAK) relationship and interaction with the taxpayers remains inadequate and there is room for improvement for the TAK to support the fight against tax evasion. The Budget and Finance Committee (BFC) and Committee for Oversight of Public Finances (COPF) of the National Assembly are still not able to effectively hold the government accountable for handling public finances, to ensure that available resources are effectively and efficiently used for the development of the country.
The MOF capacities are strengthened to prepare and execute a comprehensive and credible budget.
The TAK capacities are strengthened with regard to to the efficiency, effectiveness and its relationship with citizens and its cooperation with other institutions.
The BFC and the COPF capacities are strengthened to fulfil their mandate for budgetary oversight more strongly.
The measure follows a capacity development approach, which combines interventions at three levels: system, organisation, individual competence development.
In addition to strengthening the individual institutions in the public finance system, focus is put increasingly on better control of cross-departmental and cross-institutional work and cooperation processes. Competency building at the individual level takes place with the strategic goals of organisational development in mind, whereby both approaches mutually support each other. Adjustments to the regulatory framework are only needed at sub-legislative level in the context of the reform agenda. The implementation of new regulations will be further promoted through cooperation and coordination mechanisms.
The project advises the MOF, the BFC and the COPF in strengthening budget process, taking into account the perspective of civil society, citizens and the National Audit Office. Here, the interaction of the actors is in the foreground; personnel and institutional capacities are strengthened to such an extent that, e.g. greater demand from the parliamentary committees, citizens and civil society for information from the government can be served by the MOF in cooperation with Budget Organisations. The TAK is advised in strengthening the internal and external communication and risk management capacities. Additionally, promoting dialogue with legal actors lays the foundation for a more effective prosecution of tax offences.