Creating A New Decentralization Strategy: An International - - PowerPoint PPT Presentation

Planning and Local Governance Project

Creating A New Decentralization Strategy:

An International Perspective

March 2014

Peter Clavelle Chief of Party

Planning and Local Governance Project

Decentralization Overview

• Much progress since 1992
• Basic legal framework
• Expenditure assignments reasonably clear

(except shared functions)

• Own source revenues defined
• LG capacity improving

Planning and Local Governance Project

But – Progress Stalled

• No decentralization strategy since 2006
• Little policy dialogue and consensus building
• Fragmented local government associations
• Too many LGUs
• Many LGUs unable to provide services
• No Law on Local Finances
• Own source revenues shrinking
• Huge gap between responsibilities and resources
• Intergovernmental transfers unpredictable
• Inability to borrow

Planning and Local Governance Project

Compared to Other Countries Albania is:

• Lowest LG Revenues as share of GDP
• One of few countries not sharing personal

income tax

• 2nd lowest property tax revenue as % of GDP
• Lowest LG investment spending as share or

GDP

• Local government borrowing extremely low

Planning and Local Governance Project

Conclusions

• Fiscal decentralization not well developed
• Actions required to reverse trends and improve local

governance situation

• Administrative-territorial reform underway
• Must be accompanied by other reforms
• 2014 – milestone year for decentralization and local

governance

Planning and Local Governance Project

International Experience

• Key ingredients to successful

decentralization:

• 1. Well-developed decentralization strategy
• 2. High level of dialog

Planning and Local Governance Project

• A new National Decentralization

Strategy;

• Administrative-Territorial Reform

Key Actions Requiring Consensus

Planning and Local Governance Project

Key Issues

• 1. Develop Inclusive Institutional Mechanism for Central/

Local Government Consultation

• 2. Reconcile Expenditure Assignments to Administrative-

Territorial Structures

• 3. Define the Expenditure Assignments
• 4. Develop Fiscal Decentralization Strategy
• 5. Structure Local Government Borrowing
• 6. Reform the LGU Revenue System
• 7. Develop Synchronized Sequence of Decentralization

Process with Other Reforms (territorial planning, water, anti-corruption and Solid Waste

Planning and Local Governance Project

Agree on Priorities for Decentralization Reform

• Adopt Administrative-Territorial Reform
• Development of Fiscal Decentralization

– Law on Local Government Finance – Revise the Transfer/Grant System – Improve Own Source Revenues – Allow for Local Government Borrowing

Planning and Local Governance Project

Agree on Priorities for Decentralization Reform

Revise Legal Framework

• Law 8652 Revisions
• Revise Electoral Code
• Role of Regional Units/Second Tier

Planning and Local Governance Project

Next Steps (1)

• Define Structured Process

– Step 1: Carry out National Dialogue

• Decentralization Working Group – Convenes on March 28

– Step 2: Develop White Paper/Decentralization Strategy

• Sector Assessments (shared functions)
• National Decentralization Strategy by July 2014

– Step 3: Adopt Legal Framework

• Revise Law 8652 and Related Laws
• Election Law
• Local Government Finance Law
• Administrative-Territorial Reform
• Comprehensive intet-governmental fiscal relations system

Planning and Local Governance Project

Next Steps (2)

• Step 4: Develop the Implementing

Regulations

• Step 5: Implement the Decentralization

Program

• Step 6: Monitor, Evaluate and Retrofit

Planning and Local Governance Project