Challenges of municipalities in managing investments, expenditures, revenues and properties


Today, GAP Institute published its report "Challenges of municipalities in managing investments, expenditures, revenues and properties”. This report analyzes the findings of the National Audit Office (NAO) regarding the public investments made by municipalities, and the problems that arise in this regard, such as the inability of municipalities to realize sustainable investments which are economically favorable and completed on time.

The annual regularity reports of the NAO reveal dozens of shortcomings and challenges that municipalities have in the process of public investment, budget spending, own source revenue allocation and public property management. One of the biggest problems is the inability of municipalities to make investments within the stipulated time-line. In 25 audited projects for the duration of investments, NAO has found that there are projects that started in 2013 and which were not completed until the end of 2020.

Another challenge which impairs the performance of municipalities is the increase of outstanding and contingent liabilities of municipalities and which have increased from year to year. This also puts the financial viability of municipalities at risk. The value of contingent liabilities that municipalities have until the end of 2020 is 91 million Euros, while the value of outstanding liabilities is 34 million Euros. These obligations are owed by municipalities to economic operators and natural persons. These entities turn to the courts and bailiffs in order to obtain their funds. During 2019 and 2020, the Kosovo Treasury, took away 18 million Euros from the municipal budget based on decisions of courts and bailiffs. During this process, municipalities have paid over 2.1 million Euros in costs for courts and bailiffs.

Municipalities also face other challenges such as the realization of own source revenues. All municipalities within a single year realize own source revenues of about 79 million Euros, while revenues that municipalities have not managed to collect until 2020 are over 204 million Euros.

In addition, municipalities also commit violations which damage the public budget. These violations are related to the use of public property without contracts between users and the municipality, municipal actions to compensate property users with financial means, and up to the use of public spaces as well as apartments and locals with very little compensation.

The full report can be found by clicking here.


Infographics can be found here.

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