EU Debates Cafe: Local public administration reform in the context of the Europeanization process of the Republic of Moldova

The Institute for European Policies and Reforms (IPRE), with the support of the Hanns Seidel Foundation – Republic of Moldova and in media partnership with Privesc.Eu and Rlive.md, organized on Tuesday, February 22, 2022, the first online public debate in 2022 in the format #EUDebatesCafe, dedicated to local public administration reform.

Guests at the event, which was moderated by Adrian Ermurachi, Team Leader, Good Governance and the Rule of Law #IPRE program, spoke about the ways out of the current situation and how to ensure sustainable local development, which is the way to ensure the success of a local public administration reform, without committing the mistakes of the past, how to ensure quality services to citizens and conditions for their attraction in rural areas, how to ensure true local autonomy.

Tatiana Badan, President of CALM, Mayor of Selemet village, Cimișlia district: „If to look at all the reform attempts in the last five to ten years, we see the same mistakes that led to the failure of the reform and the existing bottlenecks. For example, unilateral top-down solutions have been imposed. There was no complex vision of reform. There was no real political will. The real interests of the people were disregarded. At the same time, the territorial fragmentation is not the main cause of the problems of the local public administration, but the distorted image of the relations in the territory. Government classes lacked the desire and capacity to implement most of the commitments made through various policy documents, both at the national and local levels.If at least half of the Decentralization Strategy or the roadmaps signed by the Government and the Council of Europe in 2016 and 2021 were implemented, the situation in local public administration would have been completely different. Thus, there is no real financial decentralization. National investment funds are centralized and politicized. Administrative control, excessive political pressure, and disproportionate actions and approaches by control and judicial bodies persist, discouraging any effort and initiative. I believe that there must be the widest possible social and political consensus on LPA reform, and that an effective institutional and legal framework is needed. “ 

Larisa Voloh, Chairman of the Public Administration Commission, Parliament of the Republic of Moldova: „Public administration reform is a commitment not only at the national level, but also at the international level, which the Republic of Moldova has expressly specified in the Association Agreement with the EU. So it is clear that this reform is a necessary, important and complex one, which can only be achieved by consensus. At the same time, the Agreement identifies five concrete areas, as a result of which the Republic of Moldova could intervene in the sphere of public administration and adjust those European standards to the realities of our country. So, we are talking about the institutional and functional development of local public authorities in order to increase the efficiency of their activity. We are talking about modernizing public services and bringing e-government as close as possible to the citizen. Also, the creation of professional public services, but also a human resources management. I want to point out that most of the time, people perceive this reform of the local public administration as a purely territorial-administrative reform. But it must be explained very clearly that the administrative-territorial reform is only a part and could be a consequence of a true and efficient decentralization – a broad process that the Moldovan communities must go through ”.

Nicolae Tudoreanu, Mayor of Feștelița village, Ștefan Vodă district: „The revenues of local public administrations are their own revenues and the right to decide on them rests exclusively with the local councils, and local public administrations must have the right to adjust the taxable value of real estate and property taxes. The fact that today for a thousand hectares a town hall collects from the land tax the same amount of money as in 1999, when the Fiscal Code was introduced, is a reflection of the total hypocrisy of all governments. The current government could have solved some of the problems facing local public administrations. For example, it could have strengthened the tax base for 2022. And if this simple amendment to the tax legislation had been made, that problem could have been solved. As of January 1, more property revenue could have been collected. But the reality is that today a city hall spends more money on the salaries of employees responsible for collecting these taxes and fees than the actual revenues. In the case of Feştelița City Hall, four years ago, the taxable value of real estate was adjusted and now not ten thousand, but 125 thousand lei are collected. And the same would have happened with the land tax, because for a thousand hectares to collect one hundred thousand lei, money that cost as much as it cost in 1999, when the Fiscal Code was introduced in the Republic of Moldova. We had a pretty good agricultural year and it was time to adjust these taxes.”

Mihai Roșcovan, President of Business Consulting Institute:„When we talk about this reform, I would like to mention two issues that need to be clarified – decentralization of competencies and financial decentralization. Speaking of the first, I remember, 10 years ago, when we had a very participatory debate with the central and local administration and then we discussed all the models. Then we were talking about which model would be chosen for the Republic of Moldova – symmetrical or asymmetric decentralization of competencies. So we had to decide how to distribute the powers between the local public administrations. Then we came to the unequivocal conclusion that we must follow the model of symmetrical decentralization, which is characteristic of most European countries. Subsequently, on this consensus, the National Decentralization Strategy was developed, approved in 2012. It was debated and implementation began. And now, after a few years of implementation and several years of non-implementation, we see that it comes with another concept – the asymmetric one. I do not know what studies are underlying this change. Especially since the second aspect related to financial decentralization was still the basis of the previously chosen model. Thus, it is now difficult to move forward until a consensus is found in choosing the models “.

Victor Giosan, EU High Levevel Adviser, Local Public Administration Reform including decentralization and voluntary amalgamation: „At this point, given my experience here and in Europe, I can say that the most important issue for the decentralization process, administrative or fiscal, is the issue of institutional capacity at the local level, but also at the national level. Today, the system of fiscal and financial decentralization in the Republic of Moldova is very similar to that in many EU member states. But we must recognize that there are two very important issues. The first is the level of development of the Republic of Moldova and the fiscal capacity of the country in general. And, thus, the share of taxes in local budgets in the Republic of Moldova, compared to other EU countries, is much lower. Then I don’t think we can realistically imagine that national budgets can make up for this lack of local capacity. Obviously, now, in 2022, to talk, in the midst of the energy crisis and the impact of a significant increase in inflation, about these things is in a way inappropriate, but this is the reality. The room for maneuver at the level of the state budget, in the conditions of a huge pressure to cover the subsidies on the energy side, in order to distribute funds to the local authorities is extremely limited.”

For more details, you can watch the video recording of the event on privesc.eu here and on Realitatea Live here.

The event was organized within the project “EU DEBATES CAFÉ: Advancing knowledge and expertise on EU institutions and policies in the Republic of Moldova”, implemented by IPRE, in cooperation with the Hanns Seidel Foundation in the Republic of Moldova and with the financial support of the Federal Ministry for Economic Cooperation and Development.