STATE AUDIT OFFICE
- Press Release-
Skopje, 22.06.2021
Non-unified requirements for managing capital transfers to municipalities from the Budget of RNM!?
Strategic documents for building long-term goals, policies and activities for stable capital transfers management system at national level do not always have clearly defined goals, activities and indicators and sources of funding. Also, the methodology in place on the manner of distribution of funds for capital transfers does not provide for integrated management thereof
The State Audit Office conducted performance audit on the topic “Capital transfers to LSGUs from the Budget of RNM”, in line with SAO Annual Work Program for 2020, to answer the question: "Is there an effective system in place for managing capital transfers to LSGUs from the Budget of RNM?"
The performance audit covered the period 2017-2019, as well as certain areas, issues and events before 2017 and until the day of reporting on the audit.
In the area of normative requirements for managing capital transfers, the authorized state auditor found that legislation does not prescribe unified manner of acting of budget users in the management of capital subsidies. Namely, in 2004 the Government of RNM had an obligation to pass a Decree on the methodology for distribution of capital subsidies, but it is still not adopted. This situation results in different treatment of budget users, which prevents integrated management of capital subsidies, monitoring of effects is complicated and there is no clear and complete picture of the state of transferred funds.
The authorized state auditor found that due to lack of information on capital subsidies in the budget circular, and given the deadline and manner of adoption of Annual Programs and Decisions for implementation of Annual Programs, municipalities are not able to plan realistically the revenues and expenditures from capital subsidies.
The largest discrepancies between planned and realized expenditures are in relation to capital expenditures. In 2017, realization of planned capital expenditures is 40%, in 2018 is 41%, and in 2019 the realization is 60%.
It was ascertained that in the period 2017-2019, around 3 billion denars were transferred from the Budget of RNM to LSGUs for capital investments in infrastructure and improvement of the environment. The share of individual budget users in the total transferred funds for capital investments in LSGUs is shown in the following graph.
The audit report states that capital investments usually include construction of infrastructure facilities, which requires longer period of time, and making decision on their financing in the middle of the current year, thus creating a risk of incomplete and untimely realization of earmarked Budget funds.
In the audited period, the Government of RNM has transferred funds in the amount of 896 million denars for capital investments to LSGUs, of which the largest part i.e. 643 million denars were earmarked for reducing air pollution, specifically in municipalities with highest percentage of air pollution. Additionally, the Government has transferred 140 million denars for cleaning and disposing of the municipal waste in the municipality of Tetovo.
In the period 2017-2019, 776 million denars were realized through the Agency for Financial Support in Agriculture and Rural Development for capital investments to the municipalities. The funds were paid for financing 162 projects of 65 municipalities, of which 448 million denars for 36 urban municipalities and 328 million denars for 29 rural municipalities. Data analysis showed that most of the funds were earmarked for sub-measures on improving quality of life in rural areas.
The authorized state auditor ascertained that despite the legal obligation, budget users that implement programs for capital subsidies did not submit complete information to the Government of RNM on the implementation of activities. Consequently, the Government does not have complete picture of total transferred funds and degree of realization and effects of capital investments, which in turn affects the national decisions on efficient allocation of funds for capital investment projects in the future.
Link to the Audit Report:
https://dzr.mk/sites/default/files/2021-06/44_RU_Kapitalni_transferi_ko…
Press contact:
Albiona Mustafa Muhadziri +389 72 228 203
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Mijalche Durgutov +389 70 358 486
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Martin Duvnjak +389 75 268 517
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