Mayors support the new system of local public finance

25 Sep 2013

image New system of local finance will allow communities to develop more dynamically and better address the needs of the people. Photo: UNDP

The new system of local finance will allow Moldovan communities to develop more dynamically and better address the needs of the people, said Moldovan mayors who attended the first training seminars on the new system of local budgets.

Mobile teams of experts composed of representatives of the State Chancellery and the Ministry of Finance travel to each district in the country to explain the new way of calculating the general and special transfers, fiscal relations between central and local authorities, and other matters of interest to mayors. The seminars are supported by the Joint Integrated Local Development Programme (UNDP/UN Women with the financial support of the Government of Sweden), the Local Government Support Project (LGSP) and the Congress of Local Authorities of Moldova (CALM).

The new system of financing municipalities establishes direct budgetary relations between the center and individual communities, provides for fairer formulas for general transfers, which are calculated by the community’s population, fiscal capacity and area. National competences, such as education or social services, will be funded via fixed special transfers. The system allows villages and communes to keep the money collected from local taxes and use these money as they see fit, thereby encouraging mayors to promote increases in the tax base and fiscal discipline in their localities. The Law on Local Public Finance was amended in two of three readings in July 2013; the Law is set for a final reading for the autumn-winter session of Parliament, which begins on 26 September.

Stefan Vlas, mayor of Sarata Galbena and president of the Association of Mayors of Hancesti district, has big plans for his commune of almost 6000 inhabitants after the implementation of the reform. With increased revenues, the municipality of Sarata Galbena can access credits and development funds for infrastructure projects, primarily for extension of water supply and sanitation, and construction of 3 km of roads. "I have been waiting for this reform for 10 years. We need not fear the reform - it allows us to collect more local taxes, which gives us greater financial autonomy. And more local revenues means more investment and development projects for our community," says Stefan Vlas.

Nicolae Tudoreanu is the mayor of Festelita, a village in the district of Stefan Voda. Although according to the new system, his municipality would get lower transfers compared with other years, Mr. Tudoreanu supports the reform, which, according to him, is first and foremost a reform of mentality. The mayor of Festelita is one of the trainers conducting the seminars. „The old system of local finance is no longer applicable to the current situation. The changes in our mentality need to be supported by changes in the legislation," says Nicolae Tudoreanu.

The Congress of Local Authorities in Moldova, which comprises over 500 mayors from across the country, is one of the supporters of reform. „Without this reform, without fiscal decentralization there cannot be a successful decentralization reform. The key of change and reform of the local public administration lies in the reform of the local government finances,” says Viorel Furdui, executive director of CALM.

The new local government funding system is introduced in accordance with the Government Programme, Moldova-2020 Strategy and the National Decentralization Strategy, adopted by the Parliament. The decentralization reform aims to ensure a balanced and sustainable development of all the localities of Moldova, build local government capacities, enhance local autonomy, and promote greater citizen participation in community life.

„Although the state budget will not automatically increase after the implementation of the reform, changes in the Local Finances Law will bring local authorities an additional 500 million lei in funding compared with last year,” says Victoria Cujba, the head of the Decentralization Policy Division of the State Chancellery the Moldovan Government.

Contact Information

Lucia Aprodu, Communication consultant, JILDP, mob: 060026702, lucia.aprodu@undp.org