PUBLIC PARTICIPATION IN THE FISCAL POLICY AND THE BUDGETARY PROCESS IN THE REPUBLIC OF CROATIA

1. Ministry of Finance of the Republic of Croatia PUBLIC PARTICIPATION IN THE FISCAL POLICY AND THE BUDGETARY PROCESS IN THE REPUBLIC OF CROATIA Vienna, 16 March 2018

2. Strengthening public participation in budget preparation • Recently, the Republic of Croatia has been continuously working on increasing transparency, and it has been encouraging citizens to participate in the budget preparation. • Public participation is more developed on the local level, where significant progress has been noted in the recent years. • The prerequisite for public participation is informing and educating the public on budgetary processes. • If authorities are hiding information, citizens cannot take part in the decision-making process. • A transparent budget protects against dissipation and misappropriation of funds, enables citizens to hold the authorities accountable, builds trust in political processes, and it can help attract investments.

3. The Budget Act • The Budget Act, as the fundamental budgetary act in the Republic of Croatia, stipulates the principle of transparency; however, it does not contain provisions on public participation in the budgetary process. • The following documents are published in the Official Gazette of the Republic of Croatia, i.e. the official journal of the local and regional self-government: • The budget and forecasts, amendments to the budget and the decision on interim financing • Semi-annual and annual reports on budget execution , and semi-annual and annual reports on the execution of the financial plan of an extrabudgetary user • Besides the aforementioned documents, strategic plans, annual financial reports and documents pertaining to public procurement are published online

4. Law on the Right of Access to Information (1) • The Law on the Right of Access to Information stipulates the obligation of public authorities to publish information in their possession on their web-site, in an easily searchable and machine readable format (fit for re-use), which includes, among others: • the laws and other regulations relevant for their scope of activities • registers and databases or information thereof within their competency • information on public services provided by the authority • information on financing sources, the budget, financial plan or other relevant documents identifying the authorities’ income and expenditures, as well as the data and reports on budget execution, the financial plan and other relevant documents • information on allocated subsidies, non-refundable grants or donations, as well as other types of support, including a list of beneficiaries and amounts

5. Law on the Right of Access to Information (2) • The authorities shall consult the public in the adoption of laws and by-laws, and in the adoption of general legislation, i.e. other strategic and planning documents, if these have an impact on the citizens’ and legal persons’ interests. • State administration bodies consult the public through the central Internet portal for public consultations, whereas other state bodies, local and regional self-government units and legal persons with public authority do it through the web-site or the central state Internet portal for public consultations, by publishing drafts of legislation, general legislation or other documents, explaining the rationale and objectives that are being aimed at through the adoption of the legislation, by-laws or other documents and by inviting the public to submit their proposals and opinions.

6. The Fiscal Responsibility Act • The Fiscal Responsibility Act has been in force since 1 January 2011, and it introduced the obligation of submitting the Fiscal Responsibility Statement as the annual statement for the heads of: • budgetary and extra budgetary users of the state budget and budgets of local and regional self-government units • LRSGU • state-owned companies in the Republic of Croatia, i.e. one or more LRSGUs and heads of other legal persons founded by the Republic of Croatia, i.e. one or more LRSGUs • By means of the Statement, the Head confirms: 1. the legal, earmarked and purposeful use of resources, 2. the effective and efficient operation of the financial management system and controls of resources identified through the budget, i.e. financial plan.

7. Fiscal Policy Committee • As a response to the need for enhancing the independence of the Commission for Fiscal Policy in line with the provisions of the Council Directive 2011/85/EU and strengthening the role of the Commission for Fiscal Policy as the supervisory body for the implementation of the Fiscal Responsibility Act, the Croatian Parliament has adopted the Decision to establish the Fiscal Policy Committee, which made it the second working body of the Croatian Parliament. The FPC was put in charge of monitoring the implementation of the Fiscal Responsibility Act separately from the Ministry of Finance, i.e. the executive branch. • The Committee replaced the former Commission for Fiscal Policy and took over its tasks. • The main task of the Committee is to monitor the application of the fiscal rule identified in the Fiscal Responsibility Act.

8. The Ministry of Finance (1) • On its official web-site www.mfin.hr, the Ministry of Finance publishes all information and documentation relevant to the public. • http://www.mfin.hr/hr/statistika-i-izvjesca • Statistical data from the field of public finance and financial reports of public companies and institutions • Information time series • Register of Non-Tax Revenues • Financial reports of public companies and institutions • The financial report of the Ministry of Finance • Publication of data in line with the Council Directive 2011/85/EU • Monthly reports by organisational classification of the state budget and classes 3 and 4 of the economic classification

9. Ministry of Finance (2) • Citizens’ Budget • State budget and forecasts • Amendments to the state budget • Report on the execution of the state budget • http://www.mfin.hr/hr/proracun-za-gradane • Unique manual for citizens’ with budgets of LRSGUs • http://www.mfin.hr/hr/lokalni-proracuni • Plan of payments to budgetary users for the current month. • Inquiries on payments from the state budget categorised by suppliers • http://www.mfin.hr/hr/izvrsenje-proracuna

10. Public participation on the local level (1) • The citizens are still not sufficiently familiar with their citizen rights; they often do not know that they have the right to access certain information. • Some towns hold public hearings on the budget, which are rarely attended and they do not encourage citizens to plan the most important document. • The Association of Cities in Croatia has recognised the importance of public participation in local decision-making processes. • The LOCAL BUDGET AND ITS ADOPTION THROUGH PUBLIC PARTICIPATION manual is aimed at contributing to the creation of an environment which will stimulate local governments to include citizens in the process of local budget adoption.

11. Public participation on the local level (2)

12. Public participation on the local level (3) • Some good examples of public participation in budget processes on the local level: • Pazin, Rijeka, Crikvenica • New examples: • Knin, Žminj

13. http://proracun.pazin.hr/ • The "Pazi(n), proračun!” project • The previously informed citizens could suggest communal actions to be financed by local councils, discuss them and then vote on them at public hearings held by 12 local councils of Pazin.

14. Rijeka • https://www.rijeka.hr/teme-za-gradane/aktivno-gradanstvo/participativno-budzetiranje-ukljucivanje-gradana-odlucivanje-proracunu/ • Public participation in the planning and use of budget funds in the City of Rijeka, i.e. participatory budgeting, which is becoming more and more popular world-wide as one of the key ways of including citizens in the work of public administration, was made possible in Rijeka through three models: • Small communal actions • Rijeka's local partnership program • Educational budget game – "Proračun(ajme)"

15. Rijeka

16. Crikvenica • Based on the Law on the Right of Access to Information, the Mayor of the City of Crikvenica adopted a plan of consultation with the interested public in 2018. • The estimated duration of e-consultation concerning the amendments to the budget is 8 days. • The estimated duration of e-consultation on the 2019 budget and 2020 and 2021 forecasts is also 8 days, but public hearings are also envisioned. • http://www.crikvenica.hr/images/savjetovanje/plan_savjetovanja_2018.pdf

17. Knin • The Moj Knin project will encompass a whole series of separate modules which will enable citizens to participate in the decision-making process and ensure a better quality of life in the city. • The most significant module in the political sense is moj e-referendum, which will enable citizens to have a direct impact on the decision-making process regarding the development of the city. • Through the e-referendum module, the city administration will pose general questions, mostly connected to identifying the main developmental guidelines, which will be followed by questions on the structure and organisation of certain city systems, specific events etc. • In the beginning, the system will be more of an advisory nature, and in the future, when the relevant response is at least 50% of the total electorate, the plan is to make the thus obtained result mandatory for the city administration.

18. Žminj • Modelled on the example of the City of Knin, Žminj plans to introduce e-referendum in the important decision-making process by the end of 2018. • For example, the citizens would first be offered several options for the best way to spend certain non-earmarked funds: free student textbooks or renovation of sport centres, asphalt pavings, regulation of the economic zone or community centre adaptation. • The plan is to encourage information literacy in (older) citizens through courses so that they can participate on the Internet forum, as well as to include ”socially excluded groups” which usually do not have a chance to influence the social life of the community.

19. Future plans • The executive government should inform citizens on how their money is spent, both on the state and local level. • This is why it is important to: • publish the most important budget documents on web-sites (timely, accurately and in an easily understandable format for the average citizen, encompassing several years and published in one place) • ensure a direct link from the homepage to the budget documents • give citizens more time for budget analysis • encourage them to deal with budgets (ask for their opinions and take them into consideration)

20. Future plans • Citizens and non-governmental organisations, as well as various associations of local and regional self-government should • be more actively educated and discuss the budget and budgetary processes • try to influence them and hold the executive government accountable

21. Thank you for your attention! QUESTIONS?