Dardan Maliqi & Violeta Hyseni Kelmendi
Municipalities in Kosovo play a major role in decision-making and management of local finances. With their autonomy guaranteed in the Constitution of Kosovo, all 38 municipalities are responsible to plan and spend the budget on infrastructure investments.
Good planning of these investments has a direct impact on improving the citizens’ lives, greater employment opportunities and an increase in income in general. In addition, a good infrastructure positively impacts issues, such as the supply of drinking water, sewerage, roads, public lighting, education, health and culture.
Municipal revenues are an important element in the economic empowerment of municipalities in Kosovo. However, they are still relatively low, so central government support is important to make greater investment in infrastructure. Municipalities receive government grants to fund services and capital projects to meet the citizens’ needs and demands. In addition, each year, the municipalities with the best performance according to a system of indicators, benefit from the Municipal Performance Grant, which they use to implement infrastructure projects. Spending their budget on capital investment – at least 75% – is one of the main criteria to benefit from this grant. The Municipal Performance Grant is awarded annually by MLGA and DEMOS through the support of donors – the European Union, Switzerland and Sweden.
Challenges for planning and spending
Municipalities continue to face challenges that hinder effective planning and spending of capital investments. Among the main challenges are the lack of human capacity to prepare the infrastructure projects, as well as the lack of sufficient budget for project implementation.
The Director for Budget and Finance in the Municipality of Kaçanik, Bahri Selimi, emphasizes that the budget allocations from government grants are insufficient against the persisting very high demands from all settlements. “The government formula for grant allocation, as such, has no criteria for socio-economic balancing between municipalities, so it is no coincidence the current situation where the absence of sufficient infrastructure investments in the smaller municipalities leads to stagnation in terms of local development, and unfortunately, a stagnation in terms of human development”, Mr. Bislimi said.
According to him, this situation is the cause for migration of population from smaller municipalities towards more developed ones, but also abroad.
Another challenge that the municipalities are facing are the procurement procedures and delays in the handling of cases by the Procurement Review Body (PRB), as confirmed by the Director of Budget and Finance in the Municipality of South Mitrovica, Igballe Islami. She also mentioned the difficulties that the municipality faces with spending funds for infrastructure investments.
“The spending plan is also a challenge for spending infrastructure investments. These problems can be eliminated with the most accurate planning, as well as the timely initiation of procurement procedures”, Ms. Islami said.
Steps to improvement
The DEMOS project is supporting municipalities in several fields towards improving the planning and spending of capital investments. One of them is the early budget planning and citizens’ involvement in giving ideas for project proposals. This is aimed at ensuring that the needs and demands of citizens, including those from vulnerable groups of society, are represented and clear to the municipalities. Thus, they can identify priority projects and prepare the budget on time.
The DEMOS project also focuses on improving internal control systems in municipalities, working with municipal assemblies and internal audit committees to strengthen their role and function. This increases municipal monitoring and performance in service provision and infrastructure project implementation. For this purpose, DEMOS also uses social audits, which include the participation of citizens and civil society in monitoring and evaluating the efficiency of infrastructure projects in the municipality, funded under the Municipal Performance Grant.
Also to support as many municipalities as possible to meet the minimum conditions and benefit from the Municipal Performance Grant, DEMOS provides support to address the challenges they encounter in budget execution for capital investments. This is intended to increase the possibility of qualifying municipalities for the Performance Grant and to improve governance in general. For this purpose, DEMOS works together with the relevant municipal officials to identify the causes of the failure to spend at least 75% of the budget on capital investments, as well as to identify areas that need to be improved, including the establishment of better mechanisms for monitoring projects and the most efficient spending of public money.
This year, the municipalities benefiting from the Municipal Performance Grant were also supported in developing more sustainable and environmentally friendly capital projects.
