Skopje, 6 April 2022 (MIA) – The vision for enhanced local development and improvement of the financial capacity of municipalities is the foundation of the reform that has been drafted into a bill currently in parliamentary procedure, which enhances fiscal decentralization. The reform is comprised of three main pillars – increased fiscal capacity of municipalities and their revenues, increased fiscal discipline of municipalities, and increased transparency and accountability, said Finance Minister Fatmir Besimi at Wednesday’s signing of a Memorandum of Cooperation with the second batch of 24 partner-municipalities within the USAID Strengthening Resource Mobilization Activity Program. “The vision for enhanced local development and improvement of the financial capacity as the foundation of this reform has been turned into a bill that is currently in parliamentary procedure. This piece of legislation ensures that more funds will be allocated in municipalities through increased VAT grants from the current 4.5 percent to 6 percent in 2024 and personal income tax rates from the current three percent to six percent in 2024,” said Minister Besimi. United States Ambassador Kate Marie Byrnes said the U.S. Government continues to support its strategic partner North Macedonia in its efforts to build a more successful and stable democracy that is firmly integrated in Europe and Euro-Atlantic institutions. “We are working together on enhancing the decentralization process, good governance, rule of law and reforms to prevent corruption, which are necessary for the integration process and a better living standard of the people of North Macedonia. A key aspect of the reform process is the creation of efficient and effective national and local institutions. This includes increased local capacities for collection and independent management of resources towards ensuring better services for citizens,” said Byrnes. Deputy Minister of Local Self-Government Zoran Dimitriovski said the project came at the right time, implemented in parallel with the Government’s activities related to the decentralization process. “The decentralization process has resulted in municipalities getting their own sources of financing from property tax, personal tax and local taxes. After almost two decades, we hope that municipalities will finally demonstrate the capacity to use these funds to the maximum. The dialogue between the national and local authorities is never-ending. Nevertheless, decentralization of power also means decentralization of responsibilities. We believe that the Government cannot and should not serve as a donor, continually covering municipal debts,” said Deputy Minister Dimitriovski. Sixteen municipalities were involved in the first stage of the USAID program, and now 24 more get the opportunity to build their capacities – Arachinovo, Berovo, Bitola, Bosilovo, Brvenica, Vinica, City of Skopje, Debrca, Delchevo, Demir Kapija, Zrnovci, Jegunovce, Kochani, Kriva Palanka, Lipkovo, Makedonski Brod, Novaci, Novo Selo, Ohrid, Prilep, Radovish, Rankovce, Resen and Tearce. Skopje Mayor Danela Arsovska said the project deliverables would ensure sustainability of municipal finances and enhancement of the process of fiscal decentralization of the City of Skopje. “Positive decentralization reforms can create a good basis for even better policies that affect good local governance, but are also welcome in strengthening the voice of local self-government units in the creation of national policies,” said Mayor Arosvska. The aim of the five-year USAID project is to increase municipalities’ own-source revenues and external funding and increase their budget execution rate in compliance with the central government’s budgeting and reporting requirements.