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UPP Municipal Finance Self-Assessment Workshop in Sarajevo, Bosnia and Herzegovina

Categories: Events, Workshops | Author: Maja | Posted: 9/27/2017 | Views: 5361

MFSA workshop Sarajevo

 

On September 12th, 2017, Urban Partnership Program (UPP) gathered representatives from Bosnia and Herzegovina (BiH) cities and municipalities (municipalities of Novo Sarajevo, Odžak, Orašje, Žepče, and cities of Tuzla and Zenica) in Sarajevo, Bosnia and Herzegovina, to discuss municipal finances and share experiences, challenges and best practices with their peers from other cities and municipalities.

 

Focus of the workshop was to present the Municipal Finance Self-Assessment (MFSA) tool to new participating municipalities. Two cities that joined MFSA family in July 2017- Tuzla and Zenica (two of the largest cities from BiH) expressed their interest to critically analyze their own financial performance with support of the UPP and by using MFSA tool. During the workshop, it was identified that one of the biggest obstacles and issues for the participating municipalities is data collection and reliability of data sources needed to carry out MFSA. Also, lack of disaggregated socio-economic data for municipal finance assessments and reviews represents significant concern for the municipalities. There are several available sources that publish consolidated data for local governments, such as Central bank of BiH, and Ministry of Finance FBiH. It was mutually agreed by all participants to use most reliable socio-economic disaggregated data published by the Federal Institute for Development Programming in order to have unified MFSA data for all local governments. With sufficient data, cities and municipalities will be able to determine the level of efficiency and effectiveness of their spending of public funds, determine priority of public investments, and be prepared for dialogue with higher level of governments (i.e. Cantons or Federation), citizens, donors, investors in public private partnership schemes (PPPs), creditors.

Second part of the Workshop was dedicated to public expenditure and financial accountability of local governments (PEFA) tool for assessing the status of public financial management (PFM) and thorough, consistent and evidence-based analysis of PFM performance. Participants expressed their interest to prepare Action Plans on how to improve their financial condition and appreciate UPP technical and capacity support to perform ratio analysis and to draft the Plans.

The cities and municipalities were very satisfied with the outcomes of this workshop and valued the opportunity to share and discuss important issues of joint interest as well as receive strategic and technical support from UPP team.

 

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"The MFSA tool is very useful and can help LGs assess their financial performance and look for additional financing. On the other hand, it is a huge responsibility to translate the budget into strategies that will drive LG's development",
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MFSA/UA

Municipal Finances Self-Assessment (MFSA)

MFSA, an assessment tool developed by the World Bank and customized for SEE with the support of international and local experts, is aimed at evaluating city’s financial health and identifying specific actions to improve mobilization of local resources, financial management, public spending, public assets management, investment programming and access to external funding. It performs several functions:

(a) it reviews municipal budgets (revenues and expenditures), financial management practices, savings capacity, investments efforts, and financial projections for the next five years;
(b) it provides some benchmarking through a set of simple and comparable key indicators and ratios;
(c) it defines key actions to be included in a Municipal Finance Improvement Plan aiming for greater accountability, visibility and efficiency in the use of public funds. 

MFSA framework of analysis includes eight steps organized in four complementary modules and is continually being evolved in practice and validated by all stakeholders. It provides a platform for making a vital connection between data inputs from various municipal financial and technical departments and allows a creditworthy assessment and strategic and capital investment planning anchored in financial realism.

More than 25 municipalities and cities took part in the Municipal Finances Self-Assessment in Phase I of UPP. Phase II intends to scale up the use of diagnostic tools for local governments and take advantage of the great momentum to replicate the LG tools in more municipalities across the region.

Belgrade MFSA Summary
Crikvenica MFSA Summary
Rijeka MFSA Summary
Sabac MFSA Summary
Subotica MFSA Summary

For full MFSA brochure, please click here.

Urban Audit (UA)

The Urban Audit, which provides a snapshot of the levels and quality of the services and infrastructure that the city provides, is typically carried out in parallel and in concentration with MFSA. Its main objectives are the gathering of baseline information of the existing location and condition of infrastructure and services, the identification of patterns of urbanization and pockets of poverty and underserviced areas, and the spatial location and quantification of the gaps, leading to the identification of a priority investment program.

The added value of an Urban Audit is that it should be carried out with:

(1) a full knowledge of the absorptive financial capacity of the municipality based on the findings of the MFSA (reality check); and
(2) with citizen participation in the screening process of priority investments.

The two self-assessments or audits lay the groundwork for a detailed Municipal Program or Contract that includes both a Municipal Finances Improvement Plan and a Priority Investments Plan.