Constant infringements found out by the Court of Accounts on correctness of forming and using Chisinau’s budget for 2005 are differently treated. Info-Prim Neo Economic Analysis

A report of the Court of Accounts (CA) notes infringements in the way of forming and using the budget of Chisinau municipality for 2005. Chisinau’s authorities say that the exact planning of the budget is impossible due to objective reasons; however some experts state that the real infringements are more serious than those presented by AC. [Deputy Mayor of Chisinau, Petru Svet] told Antena C radio station, cited by Info-Prim Neo, that the exact forecast of the incomes and expenses of Chisinau’s budget is impossible, because it is approved depending on the indexes from the state budget. On the basis of control figures provided by the Ministry of Finance, local authorities must revise all priorities and planned sums. Often, the plans of the local administration do not coincide with the figures approved by central authorities, the deputy mayor states. On the other hand, the budget of suburban units depends on the budget approved by the Chisinau Municipal Council (CMC). According to Petru Svet, the budget approved for one year can not cover all necessities. In some cases, as a result of Government’s, Presidency’s or Parliament’s tasks, the City Hall is forced to operate supplementary expenses, for which financial sources are not planned. In this way, the City Hall accumulates credit debts, which are not paid in time, because the funds coming into the budget are not proportional, Svet added. Usually, the biggest payments to the budget are coming by the end of the year, in December. At the beginning of the next year the available resources are used to pay debts for the already executed works. The deputy mayor has also explanations for the phenomenon of exceeding the maximum ceiling for expenses. Petru Svet says that the expenses plans for the works to be performed are drafted at the end or at the beginning of the year, taking into consideration the present prices. Because of the inflation, both prices for construction materials and expenses for wages’ payment go up, that is why over-expenses are admitted, Svet says. On the other hand, [the independent councilor in CMC, Mihai Roscovan], states that the volume of material damage caused by what he named bad management of Chisinau’s public finances, is much higher than MDL 7.6 mln, found out by the Court of Accounts. Roscovan refers, first of all, to the expenses related to reparation works, projects and capital constructions. The legislation in force stipulates financing of these activities only if auctions are organized. However, they, are mostly formal and do not provide efficiency or public money savings. According to the estimations, the costs of the construction works contracted through auctions are being increased by 30%. At the same time, when operating reparation works of roadways the municipal enterprises “Edilitate” and “Exdrupo” are contracted without any auctions. The prices for the provided construction services are formed on the basis some increasing coefficients of the prices from the soviet period and they substantially exceed prices on the market. At the same time, a cause of the infringements and financial frauds is the practice to implement “ad-hoc” projects, such as the so called “model district”, “pavement at the Opera and Ballet Theatre”, “Eternity Memorial” etc. Usually, these projects are not included in the budget and are implemented as result of political orders. They are financed to other projects’ detriment or out of unjustified banking credits. Another cause of the bad management of local financial resources is the lack of internal financial control department in the local administration’s structure, Mihai Roscovan affirms. After the recent reorganization, this structure was liquidated, and its functions were assigned to several subdivisions. The international experience shows that internal financial control is very important in correctly administrating local funds. This subdivision is directly subordinated to the Mayor of the locality. Both annual approval of the local budget and its implementation, are examined by the local Council only after the aforementioned structure presents detailed reports. In Moldova, however, time is needed in order to accept the implementation of other civilized countries’ experience, the independent councilor added. [Info-Prim Neo Note:] The Court of Accounts found out, among other facts that “the way the accumulations of different types of incomes were executed shows an inappropriate forecast and planning of Chisinau’s budget”. In this respect, the CA draws the attention to the debts which were not collected from the tax payers, sum which amounts to MDL 76 mln and which increased by about MDL 11 mln compared with the previous year. If speaking about expenses, the executive authorities of the City Hall did not fully respect the legislative provisions, contracting works, services, material goods and expenses “which exceed the maximum ceilings”. As a result, the implementation of the budget has resulted in credit debts to the total sum of MDL 199 mln, by 25 mln more than at the beginning of the examined period. The debit debts constituted MDL 32 mln, having the tendency of increasing, 2.6-fold compared with 2004. Particularly, AC says that the Public Transportation General Department admitted inefficient use of the public money and unjustified expenses, both by not fully cashing incomes and by the repair works which were not approved by CMC. The General Department for Architecture and Urbanism issued and prolonged in 2005 about 1000 authorizations without the signature of the specialized deputy mayor. The same subdivision of CMC has received MDL 1.5 mln without cash registers with fiscal memory. AC requested the City Hall of Chisinau municipality (General Interim Mayor, Vasile Ursu) to undertake concrete and efficient measures in order to liquidate violations and to apply disciplinary sanctions to the persons which are accountable for them.