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26th April 2021 Skopje – United Nations Development Program (UNDP) will provide for underpinning the planned reforms aimed at strengthening fiscal decentralization in the country, building local government capacity, as well as creating better public finance management system, in general. On Wednesday, Ministry of Finance, represented by Minister of Finance Fatmir Besimi and UNDP Resident Representative in North Macedonia, Narine Sahakyan signed Memorandum of Understanding, encompassing cooperation in many areas.

The envisaged support is geared towards reforms related to public finance management and fiscal decentralization, strengthening fiscal autonomy and capacities for mobilization of local government revenues, exchanging the best practices of relevance for the fiscal decentralization, implementing activities related to the action plan on eradication of informal economy, and supporting the financial market development and liberalization.

– Implementation of reforms aimed at creating better public finance management system, as well as the fiscal decentralization are among the top priorities of the Ministry of Finance. Support provided by our international partners vie exchange of experience and expert assistance in designing and implementing the respective reforms is of vital importance for this process and our country as a whole. Today’s signing of this Memorandum is evidence of the cooperation between Ministry of Finance and UNDP, covering extensive activities, among which the establishment of Equalization Fund and Performance Fund, which will provide for improving the access to finance for the municipalities. In addition, the activities envisaged therein are aimed at eradicating informal economy, creating digital platform, as well as strengthening the capacities for implementing the new Budget Law, in particular as regards the Fiscal Council – Minister of Finance Fatmir Besimi pointed out.

UNDP Resident Representative, Narine Sahakyan underlined that UNDP would support the fiscal decentralization reform via advice and pilot mechanisms for financing public services at local level.

-Today, we, together with the Ministry of Finance, reaffirmed our joint commitment to accelerating the progress towards the Millennium Development Goals by implementing responsive and inclusive policies, increasing the accountability of public institutions and speeding up the reforms related to public finance management and fiscal decentralization. Empowerment of communities by fiscally strengthening their local governments and the entire system of sub-national government finance are an integral part of the policies and strategies needed for achieving the Millennium Development Goals. Therefore, UNDP will support the development of the policy framework for fiscal decentralization through advice and piloting of mechanisms for financing public services at local level – UNDP Resident Representative, Narine Sahakyan said.

Plan for cooperation among Ministry of Finance and UNDP incorporates 13 activities, most of which are committed to strengthening fiscal decentralization. The activities also include establishment of Equalization Fund and Performance Fund aimed at improving the access to finance for municipalities, striving to strengthen the capacities for local revenue collection. What is also envisaged is introducing fiscal decentralization monitoring indicators, increasing local tax collection efficiency, improving the effectiveness and profitability of public enterprises and the municipalities, as well as increasing the transparency and the accountability of the municipalities.

Activities envisaged thereunder are also focused on determining the value of the international transfers of legal entities for tax purposes (transfer prices), electronic exchange of information for tax purposes, eradicating informal economy, strengthening the capacities of Ministry of Finance for implementing the new Budget Law upon its adoption and establishment of “Value for Money” Department, which will measure the investment impact on the economy and its development.

Both parties pointed out that creating better public finance management system, by implementing reforms in many areas, would contribute to accelerated economic development, which would, on the other hand, also provide for better living conditions and higher living standard of the citizens.

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