1. + Study on Public Administration Reform at the Local and Regional Level in the Eastern Partnership Countries: Developments Since 2012 in the Field of Decentralisation Implemented by: An EU-funded Project Dr Vyacheslav Tolkovanov Study Team Leader

2. + Study Team Members: Dr Vyacheslav Tolkovanov, Study Team Leader, Dr Juraj Nemec, Senior International Expert, Mrs Valentina Gevorgyan, national expert (Armenia), Mr Samir Aliyev, national expert (Azerbaijan), Mr Miroslav Kobasa, national expert (Belarus), Mrs Nelly Dolidze, national expert (Georgia), Mrs Angela Cascaval, national expert (Moldova), Nataliya Kyrychenko, national expert (Ukraine). The overall supervision, quality check and management have been carried out by Przemysław Musiałkowski, Team Leader of the HiQSTEP Project.

3. + PAR Study - Objectives To analyse the progress made in the EaP countries since 2012 in the following areas: Financial decentralisation Improvement of legal and institutional framework for local democracy Development of the capacities of local authorities in human resources to fulfil new functions and to improve the quality of the municipal services

4. + Outline of the methodology Primary sources of information (national statistical Data, decisions and other official documents of national governments, other information which could be received from representatives of national authorities of EaP countries); Secondary sources of information (documents provided by the national associations of local and regional authorities, NGOs, international donor organisations analytical and independent reports, media reports, documents/reports of other international organisations, local and international and "think tanks", NGOs etc). The study was implemented in the following partly overlapping stages: Desk review, based on Annex II, was mostly done by international experts in cooperation with national experts. A detailed fiche on LSG development was prepared for each EaP country; Distribution of questionnaires (Annexes I and III) to key stakeholders, collection of the necessary information and its analysis; Identification of the possible gaps and main problems; Clarification of the identified problems and gaps, through additional interviews and meetings with key experts and national stakeholders in order to validate the results of the desk review, to precise and to highlight (possible) recommendations; Finalisation of the recommendations.

5. + Initiative on Fiscal Decentralisation was formulated in 2012 by the Sub-group for Local Government and Public Administration Reform of the EaP Civil Society Forum Main conclusion in 2012 ”Fiscal decentralisation remains a difficult political issue, which might be perceived as a long-term objective” Its recommendations were used as a baseline for our study.

6. + General score on the implementation by EaP Countries of the recommendations on fiscal decentralisation formulated in 2012 by the Sub-group for Local Government and Public Administration Reform of EaP Civil Society Forum (0-5 scale) Armenia – 1,8; Azerbaijan – 0,2; Belarus – 0,4; Georgia – 3,4; Moldova – 2,4; Ukraine – 2,9

7. + PAR Study – Main Findings On average the progress made in the EaP countries in the three areas is moderate and uneven. In the area of fiscal decentralisation the scores for the implementation of Civil Society Forum recommendations of 2012 vary from 0.2 to 3.4 in a 1-6 scale. The quality of local financial management is very basic, benchmarking is not regular and its results are not publicly known

8. + PAR Study – Main Findings Most EaP Countries should still: improve the constitutional protection of LSGs reduce overlapping of responsibilities and vest, whenever possible, the local authorities with exclusive tasks; increase decentralisation of the responsibilities for provision of utilities and basic social services on local level; fix clear boundaries to the mandatory tasks/competences; introduce clear standards in service provision, which shall be consistent with the resources available.

9. + PAR Study – Main Findings In all EaP Countries the right of LSGs to execute their full responsibilities for local development with full discretion is limited, at least partly, by national legislations and even more so by bad practices Stakeholders should be motivated and allowed to become real local actors promoting genuine local democracy It is important to further develop ethical standards and anti-corruption measures in local civil services

10. + Main conclusions and recommendations 1. EaP countries’ specific issues 2. Main EaP “regional” issues The area where many possible improvements can be proposed is the level of fiscal decentralisation. LSGs and RSGs competences and resources shall be balanced, costs of delegated responsibilities fully covered by the state. The quality of local financial management is very basic (most respondents did not understand the notions like accrual accounting or cost centre – full costs accounting), benchmarking is not regular and its results are not publicly known. Medium term budgeting is introduced in most countries, however its performance dimension is not well implemented (the schemes introduced are too complicated and very badly executed – too many and inappropriate indicators, targets not properly measure and results not used to improve). LSGs and RSGs shall also be trained for public procurement (however, for all countries the priority is to improve public procurement systems, switching from compliance based to value for money based processes and evaluations).

11. + Thank you very much for your attention ! Dr Vyacheslav Tolkovanov, Study Team Leader tolkovanov@hotmail.com http://capacity4dev.ec.europa.eu/hiqstep/documents