Fiscal Decentralization Achievements and Outstanding Issues Elias Baingana
Fiscal Decentralization Achievements and Outstanding Issues Elias Baingana – National Budget
Presentation Outline 1. Background 2. Objectives of Fiscal Decentralisation 3. Achievements Made 4. Outstanding Issues
Background o National Decentralization Policy was adopted in May 2000; o Reorganization of the Administrative Divisions in 2005; o o o Fiscal Decentralization Policy was revised after evaluation of the existing one in 2006; IGFR unit was created in December 2006 specifically to follow up the implementation of the FDP; Fiscal Decentralization Steering Committee composed by representatives from MINECOFIN, MINALOC and RRA;
Background o o o Law No 17/2002 of 10/05/2002 Establishing Sources of Revenue for Districts and Towns and its Management as modified and completed by the Law No 33/2003 of 06/9/2003; Law Nº 20/2002 of 21/05/2002 Establishing CDF, CG is required to transfer 10% of its domestic revenue mobilization based on the previous fiscal year; Law Nº 17/2002 of 10/05/2002 (LW 17/2002) Establishing LABSF and Law 33/2003 raising the LABSF threshold from 2. 7% to 5. 0%; Law Nº 37/2006 of 12/09/2006 on State Finances and Property adopted in 2006 & clarification of MINALOC & MINECOFIN responsibilities; On 31/03/2008, Presidential Order No. 02/01 Establishing the List of Fees charged by Districts and Determining their Limits;
Why Fiscal Decentralization? To provide local Administrations with adequate resources and the necessary resource mobilization powers to implement their decentralized functions through: o Decentralization of taxes and revenue sources o Un-earmarked block transfers o Earmarked transfers through district budgets o Development transfers through CDF
What have we Achieved? q The Go. R has taken a number of important steps in moving the Fiscal Decentralization agenda forward: o Vision, policies, laws, and medium term plans have been formulated and functions have been progressively devolved along with financial resources; o Harmonization of planning and budgeting cycle between central and local levels; o Definition of clear guidelines governing intergovernmental financial relations; o Strengthening technical capacity in Planning, Financial Management, and Financial Control at the local level;
What have we Achieved? o Institutional Framework established and strengthened; o A number of Districts has strengthened their financial viability through administrative reorganization; o Increased intergovernmental fiscal transfers: § 2006: 35. 8 Bn (Earmarked) & 5. 3 Bn (Block grant) § 2007: 56. 3 Bn (Earmarked) & 8. 3 Bn (Block grant) § 2008: 74. 3 Bn (Earmarked) & 11. 3 Bn(Block grant) § 09/10: 78. 3 Bn (Earmarked) & 16. 4 Bn (Block grant) o Enhanced support to CDF (10%);
Outstanding Issues o Challenge of increasing revenue mobilization by LGs; o Limited staff and institutional capacities; o Unpredictable donor financing for Local Governments; o Coordinating and integrating planning and budgeting framework is still weak; o Weak implementation of the monitoring and evaluation system; o Improve the monitoring of the fiscal position of Local Governments;
- Slides: 8