Local Finance Benchmarking in the Eastern Partnership Countries

Local finance benchmarking (LFB) is a tool designed by the Council of Europe to contribute to improving local financial management and fiscal arrangements for local authorities in all European countries. It is based on two Recommendations of the Committee of Ministers, prepared after consultation with OECD, IMF and the World Bank. This tool has already produced good results in various other countries, such as Bulgaria, Greece, Portugal, Spain and Ukraine. Its implementation started in Eastern Partnership countries under the Council of Europe/European Union Eastern Partnership Programmatic Co-operation Framework for 2015-2017.

This Study was prepared by a team of international and local experts. National chapters of this study come up with concrete recommendations to overcome the existing drawbacks of LFB implementation. The preparation of this study is the first step of the project. It should lead to the preparation of national Benchmarks and their implementation on a pilot basis in 2016. It is expected that, like in most other countries where this tool was implemented, it will produce real-life reforms of local financial management not only in the pilot municipalities but also in other local authorities in the participating countries.

A national policy on promoting LFB and incentives to encourage local governments to reform their financial management practice, when appropriate in the light of the results of the implementation of this
tool are important elements for the success of the reform of financial regulations and practice. Financial management benchmarking, which is not yet widespread in the region, needs to be encouraged by disseminating
success stories from the region and beyond, thus exposing decision-making representatives from both the central and local level to these good practices and creating positive incentives for reforms.

Download the study here.

Source: Council of Europe

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