<b>Fiscal Transparency and Accountability in Local Self-Government Units: Evidence from North Macedonia</b>

This report summarizes the Observance of Standards and Codes on Fiscal Transparency for the Former Yugoslav Republic of Macedonia. It provides an assessment of fiscal transparency practices in the Former Yugoslav Republic (FYR) of Macedonia in relation to the requirements of the IMF Code of Good Practices on Fiscal Transparency based on discussions with the authorities and other organizations and through a fiscal transparency questionnaire. It also provides recommendations for improving fiscal transparency and information on fiscal risks, contingent liabilities, and tax expenditure.

The movement toward open government and fiscal transparency is a worldwide effort that promises the possibility of better and stronger democracy. Transparency is also presumed to help combat corruption and waste. Greater transparency in government thus has been an important goal of many reformers both outside and within governments over many decades, and contemporary methods of online information dissemination and communication are seen as one important set of tools for fostering transparency. But how do we know transparency when we see it? Efforts both to understand the extent and quality of online fiscal transparency and to implement or improve transparency are facilitated by good measures of quantity and quality. This chapter reviews efforts by academic experts and advocacy organizations to measure and evaluate fiscal transparency in order to draw from those efforts suggestions for the practice of fiscal transparency. An examination of these research efforts reveals significant progress in conceptualization and measurement toward addressing a number of methodological and epistemological issues that concern researchers in the field. The examination also indicates that measures such as those produced by a number of public-interest and academic researchers, although still imperfect from an academic perspective, nonetheless can provide useful guidance for practitioners and citizens seeking to understand and improve their jurisdictions' e-fiscal transparency.We conclude by synthesizing the key elements we found in the literature into a framework for conceptualizing, measuring, and implementing online fiscal transparency, and by drawing lessons for continuing efforts to advance the understanding and practice of transparency.

Fiscal transparency is not only the basic feature of the modern fiscal budget system, but also the inevitable requirement of establishing a sunshine and responsibility government. Fiscal transparency means disclosing to the public the structure, functions, public sector accounts, fiscal forecast information, etc., and ensuring that the information is timely, detailed, reliable and understandable. If local governments lack sufficient impetus to improve local financial transparency, it is clearly worth studying whether to improve local financial transparency through the bottom-up pathway. What is more, with the official implementation of the Regulation of Government Information Disclosure in 2008, public concern and enthusiasm for public information openness issues have gradually increased. At the central government level, the number of applications for information disclosure accepted by the ministry of finance increased from 17 to 1,362 in 2008-2014. At the local government level, the number of applications for fiscal information disclosure received by provincial departments of finance in China fluctuates slightly, but generally shows an upward trend. From 2008 to 2015, the provincial department of finance received 149, 222, 912, 558, 834, 892, 880 and 1616 government information disclosure applications respectively. The public’s application to local governments for fiscal information disclosure involves the three public consumptions”, the social security” information, the public pricing information and many other aspects. Based on these observations and reflections, this paper uses the panel data of 31 provinces in China from 2011 to 2015 to analyze the mechanism of public appeal for local fiscal transparency. We first use Baidu search function to structure the index which can measure the public attention on fiscal transparency problem index in different provinces and different years, then analyze the public demands for the influence of local total fiscal transparency. On this basis, we analyze the public demands for state-owned enterprise information transparency, the transparency of the social security fund and the general public budget transparency further. At the same time, there may be significant regional differences in the influence of public appeal on local fiscal transparency in coastal areas and inland areas. Therefore, we examine the regional differences between coastal areas and inland areas in which public appeal affects local fiscal transparency. Our empirical results show that the public’s focus on the three public consumption” issues will promote the fiscal transparency of the local government, the transparency of state-owned enterprises and the transparency of the social security fund. The public’s focus on social security” will promote the fiscal transparency of local government and the transparency of state-owned enterprises. However, public attention will not promote the general public budget transparency. At the same time, in coastal areas, the public’s attention to the three public consumptions” and the social security” information can significantly promote the total fiscal transparency of local governments. However, in inland areas, public appeal does not significantly affect local fiscal transparency, whether it concerns the three public consumptions” or the social security” information.

Fiscal transparency is not only the foundation of the establishment of modern budget system, but also an important way to realize the modernization of national governance system and governance capability. In order to further understand the status of provincial fiscal information disclosure in our country at present, we evaluate the provincial fiscal transparency in 2017 in China in three aspects of overall level, provincial differences and project diversities, and explore the existing problems and shortcomings of the work of provincial fiscal information disclosure. According to the evaluation results, provincial government fiscal transparency increases year by year, and the average score of 31 provinces has increased from 21.71 in 2009 to 48.26 in 2017 and has more than doubled over a short span of nine years, but the overall level of fiscal transparency at the provincial level is still low, and the proportion of disclosed fiscal information to total surveyed information is less than 50%; the provincial differences in fiscal transparency are still obvious, and the difference between the highest and lowest scores is 44.51 points, while fiscal transparency of a single province shows an unstable trend in different years. In evaluation of all the elements, the relatively high transparency scores are obtained by state-owned enterprise information transparency, general public budget transparency, followed by social insurance fund transparency, governmental fund budget transparency, department budget transparency and state-owned capital management budget transparency, and the lowest transparency scores belong to government assets and liabilities transparency and fiscal special account transparency. Among them, the average score of fiscal special account transparency is only 4.68. This paper argues that provincial government fiscal information disclosure in China has problems such as weak active public awareness, imperfect disclosure system, inadequate disclosure scope & strength, lower disclosure refinement degree, disunity of disclosure standard, disclosure with delay and time-lag disclosure carriers. So to further improve provincial fiscal transparency, firstly, we need to further refine the content of fiscal information disclosure in new budget law”, and revise the provisions in the secrecy law which are not conducive to fiscal information disclosure, in order to provide solid legal basis for fiscal information disclosure; secondly, we should introduce public participation mechanism, enhance public supervision mechanisms, and cancel public relevance” principle according to application, in order to make public fiscal information disclosure application not limited to their own production, life, scientific research and other special needs; finally, we should give full play to the supervision role of the media, academia and other sectors of society, and realize the co-governance of multiple subjects of local fiscal transparency.

PurposeMaking citizens able to monitor and evaluate public spending activities is a fundamental issue in public financial management literature. The purpose of this paper is to analyze whether fiscal transparency, measured by the Open Budget Index, has an effect on public spending performance, measured by the World Economic Forum’s Global Competitiveness Report data.Design/methodology/approachResearch methods rely on random-effects panel regression models on a country-level panel data set of 82 world countries observed in the 2008–2015 time interval.FindingsResults show that the potential positive effects of fiscal transparency are mediated by the level of democracy of the country. In detail, in democratic countries, a higher degree of disclosure of fiscal information is correlated with a higher efficiency of government spending while, in non-democratic countries, fiscal transparency does not seem to provide any effect.Social implicationsThe results suggest that fiscal transparency can be a powerful device where politicians can be held accountable for their actions, while it could fail to provide positive results where a strong and effective vertical accountability is missing.Originality/valueThe novelty of the paper is twofold. First, it provides new additional evidence about the positive effect that fiscal transparency has on public spending efficiency by advancing previous research on this topic (Porumbescu, 2017; Monteset al., 2019). Second, the paper investigates conceptually and empirically how the positive effect on public spending efficiency determined by fiscal transparency depends on the degree of democracy present in the institutional environment in which fiscal information disclosure is implemented.

This study analyzes the effects of fiscal transparency and legal aspects on the perception of the control on corruption. Our argument is that fiscal transparency can reduce information asymmetry and, thus, the existing discretionary power of public officials, politicians and legislators. In addition, we also argue that fiscal transparency and a strong legal system might be able to increase the expected cost of corruption and, consequently, the deterrent effect against corruption, once it increases the probability of corrupt officials, politicians and legislators being caught, representing important aspects able to increase the perception of the control on corruption. Based on a sample of 82 countries for the period 2006–2014 and using panel data methodology, our study provides important practical implications in terms of anti-corruption policy guidelines since the results indicate that more transparent fiscal practices bring beneficial effects in terms of corruption perception. Moreover, the findings indicate that the effect of rule of law on the perception of the control on corruption becomes greater as fiscal transparency increases (the marginal effect of rule of law on this perception increases with fiscal transparency improvements). The findings also reveal that a strong legal system (represented by a strong rule of law, integrity of the legal system and impartial and effective courts that guarantee law enforcement) increases the perception of the control on corruption.

This paper surveys that state of fiscal transparency in the wake of the current crisis and looks at what can be done to improve it. It examines the relationship between fiscal transparency and fiscal outcomes; reviews progress in promoting greater fiscal transparency over the past decade; considers the lessons of the recent crisis for existing fiscal transparency standards, practices, and monitoring arrangements; and makes a series of recommendations for renewing the global fiscal transparency effort in the wake of the crisis.

Pursuant to part 1, article 56 of the Civil Procedure Code of Ukraine (CPC), when submitting written proof supporting the existence of substantiating reasons that make it impossible for individual appeals of interested parties to the courts, it is reasonable to apply this provision to the cases in which the participation of a local self-government is optional. Such persons have an official interest, and their participation in the case facilitates to protect the rights and legitimate interests of the minors and disabled participants of civil proceedings. Local self-government bodies may apply to the court in the interests of other persons or enter into the initiated proceedings by themselves or at the request of the court. In addition, such subjects are able to provide conclusions in the exercise of their powers. Taking into consideration the expediency of barring the participation of the local self-government in the case of legal succession or the substitution of an inadequate respondent and the inadmissibility of the participants causing turmoil as to the outcome of the case in their absence, it is suggested to introduce a new edition of part 1, article 56 of the CPC as follows: «The authorities and other persons, who pursuant to article 56 of this Code, applied to the court in the interests of others, have procedural rights and responsibilities of the person on behalf of whom they are acting, with the exception of concluding a settlement agreement; settling the dispute with the participation of a judge; as well as soliciting a motion to further case consideration in their absence.» In order to legally establish the location of the local self-government authority which is to be relevant to the case in question, if the location of the place where the case is being considered differs from the location of the residence of the person in whose interest it is tried, the following third sentence is to be added to part 6, article 56 of the CPC: «The conclusion of the case is declared by the government authorities or local self-government authority of the permanent residence of the complainant or on the place where the object is located to which the conclusion applies.» The extent to which the information given by the local self-government authorities is not a source of proof, the court evaluates the situation accordingly. Taking into consideration that the conclusion drawn by the local self-government authority is broader in context than other methods of substantiation as described in part 2, article 76 of the CPC so far as testimonies of witnesses or written depositions do not take into account a legal assessment of the circumstances of the case, the author supports such legal position and considers it unnecessary to include the conclusions of the local self-government authority as evidence.

Розглянуто закордонний досвід механізмів дефолту органів місцевого самоврядування і проаналізовано стан наукової та практичної розробленості проблематики в Україні. Доведено актуальність розробки та нормативно-правового закріплення алгоритму поведінки органів місцевого самоврядування при появі ознак банкрутства. Визначено основі типи дефолтів органів місцевого самоврядування, базові елементи механізму їх врегулювання, функції профільного законодавства та наведено перелік управлінських дій, спрямованих на подолання фінансової кризової ситуації.

In this paper, we analyze the new system of improving fiscal transparency in Bosnia and Herzegovina (BiH) and its ability to contribute to increasing fiscal competitiveness. BiH has a specific system of fiscal federalism and decentralization, with four fiscal jurisdictions of disproportionate jurisdiction. By introducing the fiscal register as a public document, fiscal jurisdictions seek to increase fiscal transparency, discourage the introduction of new non-tax levies, reduce existing non-tax levies and eliminate parafiscal levies. In this paper, we investigated whether the new legislation allow for the achievement of these goals. Using the method of qualitative analysis, we concluded that rigorous conditions for entering public tax in the fiscal register and the legal provision that there is no obligation to pay any public tax if it is not entered in the fiscal register are a realistic basis for increasing fiscal transparency. A higher level of fiscal transparency should strengthen the interest of businesses and citizens in the non-tax burden and increase pressure on the government to reduce it. In order for a higher level of fiscal transparency to have an impact on increasing fiscal competitiveness, reforms of government institutions and changes in the way public money is spent are necessary.

The transparency of governments to their citizens is seen as a necessary factor in democratic accountability and, consequently, in the consolidation of democracy. Although the importance of transparency in government is often highlighted, its causes are still unknown, especially in the Brazilian context. Following the trend of international empirical research, this exploratory study investigates the relationships between three sets of variables (current and past fiscal variables, socioeconomic variables and political variables) and fiscal transparency in the Brazilian subnational context. To identify the relationship between fiscal, socioeconomic and political variables and fiscal transparency, the multiple linear regression technique was used. Prior to conducting the regression using the method of ordinary least squares, factor analysis was used, aiming to group the fiscal and socioeconomic variables into factors not only to reduce their quantity but also to eliminate their multicollinearity problems. Political variables, due to their qualitative nature, remained in their original form. The factor analysis sorted the variables into two groups: fiscal and socioeconomic factors. Because multiple regression allows only for the evaluation of the relationship between the parties included in the sample and the reference party, an F test was used to assess differences in the level of transparency among political parties. The results indicated that fiscal and socioeconomic variables explain the transparency levels of the Brazilian States. However, the political variables were not significant, indicating that the disclosure of fiscal information in Brazil seems not to be influenced by political ideologies. Furthermore, it is evident that the lack of a regulatory model of transparency in the budget process leads States to disclose a great deal of information about budget execution. Finally, the findings indicate that as an instrument for democratic consolidation, fiscal transparency remains incipient in Brazil.

The subject of this paper is the analysis of the process of establishment and organization of public administration during the Austro-Hungarian rule. At the Berlin Congress in 1878, Austria-Hungary was given a mandate by the great powers, with the consent of the Ottoman Empire, to occupy Bosnia and Herzegovina. The occupation brought about various social, military, political, and legal issues that needed to be resolved. In fact, these issues that arose represented the classical domains of state administration, such as the army, police, foreign affairs, justice, and finance. The new authority, represented by the Joint Ministry of Finance, maintained the existing administrative-territorial structure with certain necessary adjustments. Operationally, these tasks were handled by the Bosnian Office, which was superior to the Provincial Government of Bosnia and Herzegovina. The administrative-territorial organization was defined by the decree of the Provincial Government of Bosnia and Herzegovina in 1882, which prescribed that all administrative tasks be carried out in district offices with broad and diverse jurisdiction. It is important to note that the inhabitants of Bosnia and Herzegovina, within the Austro-Hungarian monarchy, had territorial affiliation instead of citizenship, which represented a special legal relationship between individuals and the state. The state administration functioned based on a hierarchical principle of subordination and responsibility, where lower organs were subordinate to higher ones. All general acts of the Provincial Government were previously submitted to the Joint Minister of Finance for approval and only came into force after obtaining such approval. The Provincial Government consisted of four departments: the political-administrative department, the financial department, the judicial department, and the civil department. The departments were headed by heads of departments. The challenges set by Austria-Hungary in the context of establishing a new administrative structure required a state administration with loyal and capable officials. A significant challenge in achieving this goal was the problem of the lack of suitable personnel, both due to the lack of professional qualifications and the departure of a significant number of educated individuals. Considering the demands of modern state administration, good education was required from officials, which, among other things, led to a significant number of officials in both central and local administrative structures being foreigners. They were mostly Austrians, Hungarians, Poles, Czechs, and Slovaks. Many of them stayed in Bosnia and Herzegovina for only a short period, but there were also those who permanently remained. The districts were divided into district offices led by district heads. A special characteristic of the administrative organization was that district offices, to a large extent during the Austro-Hungarian rule, also performed judicial functions. After the occupation, the Austro-Hungarian administration began establishing local self-government. Urban and rural municipalities were formed, and local people participated in their organs. Although municipalities were conceived as units of local self-government, analyzing their scope of authority, it can be determined that they mostly performed delegated tasks of the state administration with a very low degree of autonomy. The public administration operated on a hierarchical principle of subordination and responsibility, within which lower administrative organs were subordinate to higher ones. This paper aims to provide insight into the complexity of administrative organization and structure in Bosnia and Herzegovina during the Austro-Hungarian period. This is significant because during that period, the foundations of modern public administration in Bosnia and Herzegovina were established, encompassing not only state administration but also local self-government and public services.

Participatory budgeting (PB) can have many effects including greater legitimacy of investment decisions due to the inclusion of citizens in determining investment priorities. This leads to greater continuous participation, engagement, education and increased civic responsibility, thus achieving greater transparency in public expenditure, while encouraging accountability and responsibility of politicians. It serves as an instrument for social innovation and has positive effects on the quality of deliberation, democracy, and social capital. This study is conducting pilot research of an international project, and it focuses on the possible effects in transparency in public policy at the local level. The paper aims to explore the influence of participatory budgeting on fiscal transparency and citizens’ participation in financial decision-making among the local governments in North Macedonia and Slovakia. The findings indicate that local budget transparency is positively associated with sustainability of the PB process for both countries, furthermore the higher the level of transparency in the 2018 period, the higher the probability that PB would still be ongoing in 2022 in both countries.

This research seeks to review the level of knowledge achieved in interpreting the relationship between the ethnic diversity at the workplace in the public sector and the organizational performance; as well as seeks to contribute in understanding the implications of this relationship. The study commenced with investigating the academic research in the relevant area addressing the following research questions: (a) How are diversity management and organizational performance conceptualized? (b) What are the existing findings of research concerning diversity at the workplace in the public organizations and organizational performance? (c) What factors intervene the relationship between the diversity and organizational performance? Based on the findings from the review of the academic research, this study seeks to contribute in understanding the ethnic diversity – performance relationship and its mplications at the local level in the Macedonian context. The reform process in Macedonia as a multicultural society, where for many years, inter-ethnic relations have been one of the most sensitive political issues, affecting both the stability of the country and the progress, focused mainly on the implementation of the decentralization and inclusion of ethnic minorities in the decision making process. With the implementation of the Ohrid Framework Agreement workforce at the units of local self-government in Republic of Macedonia is becoming more balanced with respect to ethnic minorities, with more workforce participation than ever by Albanians, Turks, Roma and other minorities. As public organizations at local level become more diverse along ethnic lines, it makes sense to pay more attention to how different ethnic groups interact with one another at work. Thus it gives additional importance on the research question addressed in the study and gives significance of the research in a broader scope.

The investigation of the determinants of fiscal transparency has been mostly performed on cross-sectional data, and it has produced mixed results. This paper improves the existing literature by performing a static and dynamic panel analysis of the effect of a set of political variables on the level of fiscal transparency in 36 democratic countries. By using a recent measure of fiscal transparency based on IMF Governance Finance Statistics and available from 2003 to 2013, we find strong links between political environments and the dynamics of fiscal disclosure. Our results show that government control over the legislature exerts some negative effect on fiscal transparency, while the effect of government ideology is shown to be at least fragile. Furthermore we find that legislature fragmentation exerts a negative effect on fiscal transparency, which suggests that competition within the parliaments does not increase fiscal transparency, but instead it induces governments to react by reducing accessibility to information.