The financial autonomy of the local public authorities (LPAs) in the Republic of Moldova is limited. Financial centralization manifested through the restraining of own revenues expanded, said the public association Association for Democracy Development “DECID” that presented a study of administrative and financial decentralization. According to the authors, well-projected and implemented fiscal de-centralization, including the distribution of expenditure responsibilities, allocation of income resources for the local public authorities and intergovernmental fiscal transfers, can support the reduction of poverty. At the same time, a badly conceived de-centralization program can be harmful to the poverty combating objective.
In a news conference at IPN, Angela Secrieru, one of the study authors, said that financial de-centralization is important for the Republic of Moldova. International experience suggests that when the fiscal decentralization level is considered low, the central authorities, in cooperation with the local authorities, should identify means for increasing the own fiscal revenues of LPAs and transferred local revenues by a permanent law, without necessarily increasing total fiscal pressure.
“When the central government is unable, for objective and subjective reasons, to extend the size of public costs so as to provide diversified, high-quality public services at accessible prices, in accordance with the market requirements, localization processes in the Republic of Moldova become necessary, including through fiscal de-centralization and engaging of the public sector in the provision of public services, including through public-private partnerships,” stated Angela Secrieru.
As to the structure of local budgets revenues, the author said the transfers account for the largest part. In 2019, they represented 73.7%. “We see that the size of deductions from state taxes decreased, as did the own incomes, grants and collected revenues. The conclusion is that we have an increased financial centralization level in the Republic of Moldova,” explained Angela Secrieru.
The study shows the local budgets of the territorial-administrative units of Moldova have an insufficient financial potential. This tendency affects, among others, the independence of the LPAs in decision-making at the local level, generating denatured development preconditions in particular localities, to the detriment of others, which are often based on political reasons, ultimately determining the accentuation of the decline in local savings.
