09.01.2015

"Under the conditions of shortage of resources the effective spending of the latter becomes still more important and programme-oriented budgeting is one of the preconditions for attaining better results and better accountability, especially for the municipalities where local authorities report on a daily basis and are elected directly by citizens. For this reason it would be a good thing if all municipalities gradually introduce more modern methods to manage their budgets." Minister of Finance Vladislav Goranov said the above after signing the Memorandum of cooperation and partnership in implementing the process of programme-oriented budgeting together with the Mayor of Sofia municipality Jordanka Fandakova. Minister Goranov expressed the readiness of MoF experts to assist the Sofia municipality in adopting and implementing a better structured budget and subsequently the connection between the spent funds and the results for its citizens to be reported. In turn, Jordanka Fandakova pointed out: "This Memorandum enables us to better manage the budget of the Sofia municipality because when we talk about money it is important not only how much but also how it is allocated, spent and reported."

„Our task as a government is to overcome the inequalities among regions. The fact that today we are signing a Memorandum with the Sofia municipality is a good start but the task is much more complicated - the good governance as a model to also spread in the areas where the resources are more limited", commented Vladislav Goranov. He added that the initiative for introduction of programme-oriented budgeting by local authorities had come from the Sofia municipality and the team of the Ministry of Finance had expressed its readiness to provide full cooperation. "Any interested municipality is welcome. Any mayor and any municipal council that wants to use this model of budget preparation and management will be supported with all MoF resources", the Minister assured. He pointed out that programme-oriented budgeting was not a panacea for the effective management of any budget but it provided much more information in its preparation and execution as it included tools and techniques which were to keep a connection between the expenditures made and the results achieved thereby. According to him, this topic will more and more frequently come to the fore as a tool for better accountability not only for local authorities but also for the central government.

The Minister shares the opinion that there is an ever clearer necessity the limited resources to be better managed by local authorities. He announced that a concept paper was being prepared and would be proposed as a legislative decision, according to which municipalities in financial distress would take the relevant rehabilitation measures. The measures are to be communicated to and influenced by the central government. "We will propose a solution for the municipalities which are not managed well - if they want and seek financial assistance from the government to solve their problems they should take certain commitments for structural measures which are to improve as a whole their financial management", he explained.

The Minister of Finance pointed out that the first step towards better management of local taxes and fees had also been made, adding that since 01.01.2015 the work on a lot of measures in that direction had been continuing under the auspices of MoF. In his opinion the purpose is the citizens to establish and manage their liabilities as quickly and easily as possible. The Minister said that virtual POS terminals were to be developed and introduced so that the citizens could pay their taxes more and more easily. "A number of innovations will be introduced in 2015", he pointed out, "related to improving the servicing of citizens and speeding-up the process of administrative services on both local and central level. We have already had the opportunity to describe the personal identification codes of the NRA which will be integrated as a universal key into the systems for both local taxes and fees - similar pilot projects have been launched in Sofia and Plovdiv, and in general for all electronic registers managed by the state so that the citizens can identify themselves and use a maximum number of services for free.

To a journalist's question whether the government has abandoned the pre-election promise the municipalities to be able to decide by themselves whether to increase personal income tax by 2%, Minister Goranov answered as follows: "The government took office at the beginning of November when the tax laws had already been prepared; the State Budget Law was also ready to a great extent. New tax decisions are adopted at the end of the year and stay in force in the next budget year; the topic will be included in the agenda of the tax campaign for 2016. The programme of the government is prepared for a period longer than one year and we have not abandoned that measure."