Fiscal Reforms in South Eastern Europe, Phase III

The COVID pandemic is leaving the beneficiary countries in a weaker fiscal position to face emerging challenges. They face higher debt levels and weaker balance of payments and net foreign investment positions than before the pandemic. In Public Financial Management, strengthened infrastructure governance and debt sustainability will be important. In Revenue Administration, effort is needed to collect deferred revenues and delayed payments. In Tax Policy, the challenge is to ensure timely phase-out of COVID relief measures, as well as tailoring country-specific responses to recent increases in international energy and food prices.

The overall goal of the program is to help beneficiary countries develop more transparent, effective, and resilient institutions in key areas of Public Financial Management (PFM), Revenue Administration (RA) and Tax Policy (TP). Optimizing PFM through better Public Investment- and Fiscal Risk Management helps creating the framework conditions for high quality public service delivery and inclusive and sustainable economic growth. Strengthening of core RA functions as well as management and government arrangements leads to more efficient collection of taxes. Efficient and equitable designing of tax systems will help generating the necessary resources while providing the right incentives for taxpayers and minimizing distortions.

PFM:

Analysis, disclosure and fiscal oversight of public corporation risks are strengthened

Fiscal costs and risks arising from Public Private Partnerships are managed and contained

Implementation of public investment projects is improved to deliver productive and durable public assets

Public investments are allocated to the right sectors and projects

RA:

Capacity for reform increased due to clear reform strategy and a strategic management framework adopted and institutionalized

A larger proportion of taxpayers meet their payment obligations as required by law

Audit and other verification programs more effectively ensure accuracy of reporting

Taxpayer services initiatives to support voluntary compliance are strengthened

TP:

The tax base is broadened

The equity of the tax system is improved

Labor tax wedge analysis is fully utilized and taken into consideration in the personal income tax reform analysis

Improved institutional capacity for tax policy analysis

Principaux résultats attendus:  

PFM:

Training of fiscal risk unit provided

Training on SOE Health Check Tool

Support in the follow-up on PIMA reccomendations provided

Support provided for improving the capacity in capital budget planning, execution and capital project tagging

Provide support on strengthening the PIM process to develop a single project pipeline

RA:

Training on management of transformation process, develop strategic and operational plans, set and monitor KPIs

Hands-on support in developing internal CRM processes, enhancing CRM capacity through the development of risk models, and preparing compliance plans

Support the preparation of the compliance strategies for increased voluntary (on-time) payments and improved debt recovery

Support to strengthening audit process provided

TP:

Support establishment of an effective evaluation process

Support modernization of the TPU structure

Build human capacity and staff skills through training on tax policy analysis tools and methodologies

Principaux résultats antérieurs:  

PFM:

Comprehensive and entity-level PFM reform strategies in BiH adopted

Second generation PFM reform strategies prepared (SER) or underway (ALB, KOS, MNE, and MKD).

Improved budgeting through introduction of spending reviews and expenditure baseline.

Two PIMAs conducted (MNE, MKD)

Three PIM action plans adopted (MNE, MKD, SER) and strengthened policies approved for project selection (KOS, SER).

Improved risk fiscal risk disclosure and decision to introduce a fiscal risk unit in KOS.

Strengthened assessment of fiscal risks of State-owned enterprises (BiH, KOS, MNE, SER)

RA:

Arrears management organization and processes consolidated (ALB, KOS).

Reform capabilities strengthened (SER, KOS).

Data-driven and risk-based approaches adopted (ALB, KOS, SER, BiH – partially).

Compliance management of large taxpayers and HWI improved (ALB, SER).

Debt collection organization and procedures improved (ALB, KOS).

E-services significantly expanded (mandatory e-filing)