The MFSA technical webinar on the potential impact of the Covid-19 crisis on local finances was organized on October 2 2020, under the Urban Partnership Program (UPP) and in collaboration with regional and local finance experts, municipal finance departments from South East-Europe, as well as NALAS. The and participants included representatives from cities and municipalities, Ministries of Finance and Local Government Associations from Albania, Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, North Cyprus, North Macedonia, Serbia and Romania.
The UPP has been strengthening financial management and supporting capacity building with a network of local experts in the region through the Municipal Finance Self-Assessment and related tools since 2011. Today we are facing different and uncertain circumstances with the global Covid-19 pandemic. Therefore, the main topic of this webinar was sharing experiences from LSGs across different European countries and municipalities on the impact of Covid-19 on local government financial health and how the Municipal Finance Self-Assessment (MFSA) tool could be used to assess the potential impact of COVID-19 on local finances by developing different scenarios.
One of the key inputs shared during the webinar was that municipalities, now more than ever, need to take a more serious approach toward designing their risk strategies. The budget planning process prescribes planning proper cash reserves and budget reserves in times of crises, epidemics, catastrophes (one of the examples is from North Macedonia where LSGs need to be able to plan up to 3% in the budget as budget and cash reserves), like the current Covid-19 crisis.
Merita Toska, MFSA local expert from Albania, shared that the pandemic of COVID-19 in Albania has two main channels through which it could affect municipal finances:
(i) Revenues from own sources, which are expected to register a decline over 2020 and 2021;
(ii) Revenues through intergovernmental transfers.
Natasa Obradovic, MFSA expert from Montenegro, shared that they experienced a decline in revenues, mostly due to the high dependence on the tourism industry branch. One of the recommendations was to ensure that municipalities provide essential services to citizens in these challenging times through the union of municipalities that has a strong role and can advocate for LSGs at the national level.
Alexandru Damian, guest speaker from Romania, said that in Romania the national government improved allocations to local governments, but that in 2021 and 2022 the government will have less support funds available, and that, especially with another surge of cases, the situation will probably become even more difficult. Compared to UPP countries, Romania increased capital investments by almost 50% as a result of the accessibility of EU Funds. The
key message shared was that the predictability of central transfers is paramount in enabling LSGs to quickly adjust and respond.
Elton Stafa from NALAS shared that NALAS conducted a post COVID-19 survey among SEE local governments the main purpose of which is to help understand the financial and socio-economic impact of COVID on LSGs, to support the recovery and to identify policy recommendations. Some 25% of LSGs experienced a very strong impact, including disruption of services, damages to local economy and the society. Equally important is the strong country specific and territorial dimension, across countries and within countries.
More publications from NALAS related to post Covid-19 can be found at:
More info about the survey can be found at:
During the final panel discussion, participants agreed that even more challenging times lay ahead of us. Both EU and non-EU countries had to activate different mechanisms to go through this fiscal year. What is more alarming and challenging are the one or two post COVID-19 years ahead of us, since all reserve funds have been used and the chance of central governments being able to support LSG significantly during the next two years is low.
Final Agenda MFSA
NALAS presentation - COVID Survey
NALAS Survey SEE Local Governments in Post COVID-19 Socio-Economic Recovery
MFSA - Marjan Nikolov
Banjaluka MFSA COVID-19
Tuzla MFSA COVID-19
COVID-19 financial impact Kisela Voda
COVID-19 Impact Local Economy MGB Budget
Webinar COVID-19 Pandemic Risk and Potential Impact on LSG Finances
Other resources available:
Better Cities, better World: a Handbook on local self-governments assessments: