2017年-世界发展银行全球_Establishing_a_Fiscal_Risk_Management_Department_in_the_Ministry_of_Finance_of_Serbia_68页_1mb

Summary of Establishing a Fiscal Risk Management Department in the Ministry of Finance of Serbia

Core Content

This document outlines the findings and recommendations of a technical review and workshop conducted in Serbia in March 2016, aimed at strengthening the country's fiscal risk management framework. The review was supported by the World Bank and the Swiss State Secretariat for Economic Affairs (SECO), and it highlights the need for the establishment of a Fiscal Risk Management Department (FRMD) within the Ministry of Finance (MoF) to better manage fiscal risks and improve coordination across government entities.

Main Points and Key Information

Fiscal Risks Faced by Serbia

Serbia faces significant fiscal risks, primarily from:

• Poor performance of public and state-owned enterprises (SOEs): Leading to revenue shortfalls and increased expenditure.
• Activation of government-issued guarantees: When local governments or SOEs fail to meet debt obligations, the government may be required to repay.
• Natural disasters: Such as the 2014 floods, which caused economic losses and affected public finances.
• Financial and foreign exchange market volatility: Including currency depreciation and interest rate fluctuations.
• Decline in economic activity: Which may lead to lower tax revenues and increased public spending.
• Banking sector crisis: Potential insolvency of banks and increased borrowing costs.
• Public-private partnerships (PPPs): Risk of project revenue shortfalls and unforeseen cost increases.
• Local government budgets: Excessive fiscal deficits may increase transfers from the central government.

These risks are classified into direct explicit, direct implicit, contingent explicit, and contingent implicit liabilities, with the latter being more complex and less systematically managed.

Current Practices and Legal Framework

Relevant Legislation

Several laws and regulations are relevant to fiscal risk management in Serbia:

• Budget System Law: Governs budget planning and management, including the use of contingency funds and the roles of the Fiscal Council and Treasury.
• Public Debt Law: Addresses public debt management, exchange rate, and interest rate risks.
• Law on Public-Private Partnerships and Concessions: Regulates PPPs and requires consideration of risk distribution in contracts, though lacks a dedicated fiscal risk monitoring body.
• Law on the Use of Funds for Restoration and Protection from Natural Disasters: Establishes a fund for disaster recovery.
• Law on Reconstruction Following Natural and Other Hazards: Replaces the previous law and introduces a Government Office for Public Investments Management, but still lacks a comprehensive fiscal risk management mandate.

Stakeholders Involved

Key stakeholders in Serbia's fiscal risk management include:

• Ministry of Finance (MoF): Central to fiscal risk management, with several departments and units involved.
  • Public Debt Administration (PDA): Manages public debt, monitors financial markets, and oversees state guarantees.
  • Department for Macroeconomic and Fiscal Analysis and Projections (DMFAP): Forecasts fiscal and macroeconomic variables and drafts the Fiscal Strategy.
  • Budget Department: Prepares and approves the national budget, monitors local government and SOE budgets.
  • Internal Control and Audit Department: Reduces operational and fiscal risks through improved financial management.
  • Public Enterprises Monitoring Group (PEMG): Monitors SOEs and public enterprises, but lacks advanced risk analysis tools.

International Good Practices and Gaps

International Good Practices

The review highlights several areas where Serbia's fiscal risk management could be improved by adopting international best practices:

• Fiscal reporting: More transparent and comprehensive reporting of fiscal risks.
• Risk quantification and mitigation: Better methods to assess and manage risks, including scenario analysis and stress testing.
• Monitoring of state-owned and public enterprises: Enhanced oversight and analysis.
• Management of fiscal risks in PPPs: Improved risk assessment and monitoring mechanisms.
• Proactive risk management: Encouraging government decision-makers to prioritize fiscal risk management recommendations.
• Disaster risk financing: Establishing contingency funds and insurance mechanisms.

Gaps in Current Practices

Despite some legislative coverage, significant gaps exist in Serbia's fiscal risk management framework:

• Legal framework: No specific law comprehensively addresses fiscal risk management.
• Coordination: Responsibilities are spread across multiple departments and agencies.
• Capacity: Understaffing and lack of specialized skills hinder effective risk management.
• Reporting and transparency: Fiscal risks are not adequately quantified, reported, or mitigated.
• Institutional structure: No dedicated unit for fiscal risk management exists, with PEMG handling some aspects but not all.

Recommendations

High-Level Recommendations

1. Establish a Fiscal Risk Management Department (FRMD) within the Ministry of Finance.
2. Define clear roles and responsibilities for the FRMD and other stakeholders.
3. Improve coordination between the FRMD and existing entities such as the Budget Department, PDA, and the Fiscal Council.
4. Enhance fiscal risk reporting and transparency.
5. Strengthen capacity through training and recruitment.

Proposed Organizational Structure

The FRMD is proposed to be composed of three units:

1. Public and SOE Risk Unit: Monitors risks related to public and state-owned enterprises, and state guarantees.
2. Macro and Financial Market Risk Unit: Focuses on macroeconomic and financial market risks, including currency depreciation and interest rate fluctuations.
3. Local Government and Disaster Risk Unit: Addresses risks from local government budgets and natural disasters, and identifies new potential sources of fiscal risk.

Mitigating Implementation Obstacles

Potential obstacles include:

• Legal and procedural gaps: Can be addressed through legislative amendments.
• Public sector hiring freeze: Initial staffing can be managed by reallocating existing personnel.
• Resistance to change: Can be minimized through effective communication and workshops.

Conclusion

The establishment of the Fiscal Risk Management Department (FRMD) is critical to improving Serbia's fiscal resilience. The FRMD will play a key role in identifying, quantifying, monitoring, and mitigating fiscal risks, while also enhancing coordination and transparency. The review emphasizes the importance of aligning with international best practices and improving institutional capacity to ensure effective fiscal risk management.