Nicoletta Feruglio asks about experience of legislation relating to the regulation of local government’s investment (
http://pfmboard.com/index.php?topic=6676.msg20368#msg20368). But what is good practice with respect to ex-ante reviews and those reviews during the operations of these enterprises?
PEFA indicator PI-9 (i) covers oversight in relation to other public sector entities and should monitor and manage fiscal risks with national implications arising from activities of sub-national (SN) levels of government, autonomous government agencies (AGA) and public enterprises (PE), including state-owned banks, but may also for political reasons be obliged to assume responsibility for financial default of other public sector entities, where no formal oversight role exists. In the case of local government (SN) who have enterprises under their ownership or jurisdiction, the PEFA assessment guidelines relate to requiring and receiving quarterly financial statements and audited year-end statements from AGAs and PEs, and monitor performance against financial targets. AGAs and PEs often report to parent line ministries, but consolidation of information is important for overview and reporting of the total fiscal risk for the local government. Monitoring of these fiscal risks should enable it to take corrective measures arising from actions of AGAs, and PEs in a manner consistent with transparency, governance and accountability arrangements, and the relative responsibilities of central government for the rest of the public sector.
What is the experience relating to this dimension?
Two recent SN PEFA assessment for Kosovo (11 municipalities) provides the experience where the legal framework recognises that such supervision should be undertaken.
What about the specification of the types and circumstances of appropriate investments made in private companies by municipalities at the local level? Should local governments be involved in this category at all?
