Open Treasury (MK0126)

Open treasury
Start and end date of the commitment: August 2018 – August 2020
Lead implementing agency
Ministry of Finance
Description of commitment
Status quo or problem addressed by the commitment
There is no publicly available base in Macedonia or an Open Treasury, where review and analysis of the budget revenues and expenditures of the budget users can be performed on a regular basis. The absence of such an open base for the current budget execution by a budget user often raises the public's doubt about the real spending of budget funds by budget users. This problem leads to the need to open the treasury for the general public.
Main objective
Publicly available data base for Budget execution of the budget of the Republic of Macedonia and the budgets of the of local self-government units, which would be included in the projects in the second phase along with the healthcare institutions.
Brief description of the commitment In order to increase transparency and achievieve greater approximation of the information regarding RM’s budget expenditrure to the citizens and all interested parties, and at the same time to use the data for analytical, scientific and research purposes, the Ministry of Finance decided to open the data to the public. This commitment will allow the the Ministry of Finance in cooperation with the International Republican Institute15 to implement the concept of "Open Treasury" or "Open Funds" as part of the transparency for RM’s Budget expenditure. The data that should be presented through the “Open Treasury” system will be extracted from the existing financial information system, by enabling the data exchange at a database level between the new solution and the existing state IT system. The application will offer: - data search after a certain time interval, period and after a certain date, by name/natural or legal entity or budget user, - the data will be published in a machine readable format in accordance with the Law on public sector data application, - organizing the transaction/payer data, recipient, expenditure unit, payment order, group of taxpayers (for example, cultural and university institutions), a group of recipients (natural or legal entities) above or below a certain value, - data search by time of publication, allowing the user to determine the time range in searches, - advance definition of user options, for example, transactions only to legal entities, only to physical entities, etc., or transactions over a certain amount of money, expenses, etc.,
- an option to disable the publication of certain transactions or to modify them prior to publication, such as covering the name and surname with "Unknown Person (UP)" or excluding all or some of the transactions of certain budget users that are considered and classified as confidential. Such exclusions can be made from the Unique Registry Number (URN) according to the budget program, type of account, account of the recipient and expenditure items, - graphical visualization of the searched data with automatic update, - the realization is expected to create a database with current data for RM’s budget execution in the first phase and the budgets of the local self-government units in the second phase. In addition to serving as a tool that enables categorization of data from transaction databases, this solution will allow the data to be set according to the specifications for budget user’s spending in different format and from other databases, where aggregated data will display Comparison of the approved budget and the budget executed at user level, in different time periods, but always limited by seperate fiscal year (from 01.01.YY to 31.12.YY). Various comparative reviews will also be generated, for example, the largest spenders (at fiscal year level) or the expenditures of a particular budget user or group of users, per item, per period, etc
OGP challenge addressed by the commitment - Incresing the public integrity - More effective public resource management Additional information Link to Goal 17, "Partnership for Objectives" Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection and Goal 16, "Peace, Justice and Strong Institutions" Target 16.6: Develop effective, accountable and transparent institutions at all levels. This commitment contributes to improving the transparency and accountability of public finance management institutions through greater transparency and accountability in public resource management.
Milestone
3.1.1 Analysis and creation of database with current data for the execution of the Budget of the Republic of Macedonia and its update on 15 days Ongoing 6.2019 3.1.2 Analysis and creation of database with current data for the execution of the Budget of the local self-government units and its update on 15 days 6.2019 6.2020 3.1.3 Preparation and initiation of the “Open Treasury” Web application 10.2018 6.2019
Contact information
Name of responsible person from implementing agency Branko Dimchevski – Treasury Sector Maria Kitanska – IT Sector Goran Mojanoski – Sector for Financial system (co-ordinator of the working group in the Ministry of Finance for OGP) Title, Department Treasury Sector and IT Sector
Phone and e-mail branko.dimchevski@finance.gov.mk; 02 3255 586 marija.kitanska@finance.gov.mk; 02 3255 329 goran.mojanoski@finance.gov.mk 02 3255 538
Other actors involved
International Republican Institute Address: 11 October 8-2 /3 The City of SKOPJE iri_mk@t-home.mk

Theme III: Fiscal Transparency

3.1. Open treasury

Language of the commitment as it appears in the action plan: [34]

In order to increase transparency and achieve greater approximation of the information regarding RM’s budget expenditure to the citizens and all interested parties, and at the same time to use the data for analytical, scientific and research purposes, the Ministry of Finance decided to open the data to the public. This commitment will allow the Ministry of Finance in cooperation with the International Republican Institute to implement the concept of "Open Treasury" or "Open Funds" as part of the transparency for RM’s Budget expenditure.

The data that should be presented through the “Open Treasury” system will be extracted from the existing financial information system, by enabling the data exchange at a database level between the new solution and the existing state IT system. The application will offer:

• data search after a certain time interval, period and after a certain date, by name/natural or legal entity or budget user,
• the data will be published in a machine readable format in accordance with the Law on public sector data application,
• organizing the transaction/payer data, recipient, expenditure unit, payment order, group of taxpayers (for example, cultural and university institutions), a group of recipients (natural or legal entities) above or below a certain value,
• data search by time of publication, allowing the user to determine the time range in searches,
• advance definition of user options, for example, transactions only to legal entities, only to physical entities, etc., or transactions over a certain amount of money, expenses, etc.,
• an option to disable the publication of certain transactions or to modify them prior to publication, such as covering the name and surname with "Unknown Person (UP)" or excluding all or some of the transactions of certain budget users that are considered and classified as confidential. Such exclusions can be made from the Unique Registry Number (URN) according to the budget program, type of account, account of the recipient and expenditure items,
• graphical visualization of the searched data with automatic update,
• the realization is expected to create a database with current data for RM’s budget execution in the first phase and the budgets of the local self-government units in the second phase.

In addition to serving as a tool that enables categorization of data from transaction databases, this solution will allow the data to be set according to the specifications for budget user’s spending in different format and from other databases, where aggregated data will display Comparison of the approved budget and the budget executed at user level, in different time periods, but always limited by separate fiscal year (from 01.01.YY to 31.12.YY). Various comparative reviews will also be generated, for example, the largest spenders (at fiscal year level) or the expenditures of a particular budget user or group of users, per item, per period, etc.

Milestones:

3.1.1 Analysis and creation of database with current data for the execution of the Budget of the Republic of Macedonia and its update on 15 days

3.1.2 Analysis and creation of database with current data for the execution of the Budget of the local self-government units and its update on 15 days

3.1.3 Preparation and initiation of the “Open Treasury” Web application

Start Date: August 2018

End Date: August 2020

Context and Objectives

This commitment intends to make national and local-level budget expenditure data in North Macedonia more accessible to the public. In the International Budget Partnership’s 2017 Open Budget Survey, North Macedonia received 37 out of 100 possible points in transparency, a score that was below most other Western Balkan countries. [35] Under Commitment 5.1 from North Macedonia’s 2016-2018 action plan, the Ministry of Finance improved public scrutiny over the budget, including the publication of citizens’ budgets for 2017 and 2018, [36] a projection of revenues and expenditures of the state budget, and a semi-annual report on the implementation of the state budget. [37] In addition, the European Commission reported in 2019 that budget transparency in North Macedonia had improved due to the publication of the citizens’ budget and increased budgetary data. [38] The 2018 budget was also subject to public consultations. [39]

However, prior to the action plan, available data on the execution of the budget was aggregated and was not presented in an open data format. In order to obtain more detailed information held by the Treasury on the execution of the state budget, citizens often had to submit freedom of information requests, which was a time-consuming and inefficient process. [40] In addition, detailed data on the budget execution at the local self-government level was largely unavailable or not easily accessible to the public. [41]

To further improve budget transparency, the Ministry of Finance, with support from the International Republican Institute (IRI), plans to develop an online database and web application for the public to access data on all transactions disbursed by the Treasury (called "Open Treasury" or “Open Finance”). The data for the Open Finance database will be extracted from existing information systems and will be published in machine-readable format where users will be able to easily cross-compare the approved budget against the executed budget. According to the action plan, users will be able to organize the data according to transaction/payer, recipient, expenditure unit, payment order, group of taxpayers (for example, cultural institutions or universities), group of recipients (natural or legal entities), and above or below a certain value. In addition, under the second phase of the Open Finance project, the Ministry of Finance plans to include data on the realization of the budgets for local self-governments. The budget data for the national and local governments will be updated automatically every 15 days.

The publication of detailed data on budget transactions makes the commitment clearly relevant to the OGP value of access to information. The commitment’s planned activities are verifiable, particularly the creation of the database with the aggregated data, the subsequent updates every 15 days, and the creation of the corresponding web application. If implemented, the Open Finance portal could transform access to budget data in North Macedonia. Opening budget data to public access at the national and local levels with the frequent updates would be a significant step toward increasing transparency in government expenditure. The action plan specifies that the new publication format would make it possible to search published data and provide a basis for analysis and comparison of resource consumption across enterprises, in machine-readable format, which was not possible previously. The portal could provide interested citizens, civil society, and media outlets with detailed and disaggregated data on all transactions paid by public institutions in North Macedonia, much of which was previously unavailable or only available by submitting a freedom of information request. [42] Finally, the portal could provide citizens with more detailed data on public spending at the local self-government level than before the action plan.

Next steps

The Open Finance portal has been developed and launched in November 2020. [43] The Ministry of Finance and IRI are currently working on expanding the portal to include budget data on all transactions by local self-government units from 2010 onwards. The IRM recommends:

• Evaluate the results and use of the web-portal to identify improvements and changes that may be implemented. This could be done by involving stakeholders and end users of this information, such as watchdog groups and journalists.
• Specify a detailed level of information on expenditures (e.g. the general expenditure article or the costs, the vendor, etc.).
• Take measures to ensure that the number of public bodies reporting to the portal increases.

[34] The texts for all the commitments are an abridged version of the commitment texts. For the full commitment texts, see the Republic of North Macedonia 2018-2020 National Action Plan, https://www.opengovpartnership.org/wp-content/uploads/2018/09/Macedonia_Action-Plan_2018-2020_EN.pdf

[35] Open Budget Survey 2017, Macedonia, https://www.internationalbudget.org/wp-content/uploads/macedonia-open-budget-survey-2017-summary.pdf

[36] Ministry of Finance, https://finance.gov.mk/mk/node/6597#overlay-context=

[37] Commitment 5.1 in North Macedonia’s 2016-2018 action plan, p 39, https://www.opengovpartnership.org/wp-content/uploads/2019/11/Macedonia_End-of-Term_Report_2016-2018_EN.pdf

[38] European Commission, p 12, https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/20190529-north-macedonia-report.pdf

[39] Ibid.

[40] Ilina Mangova, International Republican Institute, email correspondence with IRM, 23 January 2019.

[41] Ibid.

[42] Ibid.

[43] Available at https://open.finance.gov.mk/mk/home

Commitment 3.1 Open treasury

Completed:

For details regarding the implementation and early results of this commitment, see Section 2.3.

Aim of the commitment

The commitment set out to improve transparency of information regarding budget expenditures by making national and local-level budget expenditure data in North Macedonia more accessible to the public. To do so, this commitment would introduce an online database and web application for data on all transactions disbursed by the Treasury (“Open Finance”), including budgetary data for local self-governments.

Did it open government?

Major

The International Republican Institute (IRI), with the support of the United States Agency for International Development (USAID) and the Ministry of Finance, developed the content for the publicly available database on budgetary expenditure, available on open.finance.gov.mk/home. The database, released on 20 November 2019, contains information on the spending of state- funded institutions administered through the Treasury. It includes data on national and local-level information from 2010 onwards and is updated every 15 days. The system publishes information automatically and is adapted for people with impaired vision. [20] Therefore, the commitment as set out in the action plan was completed. The adoption of the Law on Free Access to Information of Public Character in 2019 contributed to the successful implementation of this commitment. The law obligates budgetary data to be made publicly available and regularly updated, which was not the case under the previous law. [21]

The lack of transparency around budgetary expenditure, both at the national and local levels, had been a long-standing challenge for North Macedonia. [22] Prior to the commitment, citizens had to submit freedom of information requests to obtain information on the spending of state institutions, which, except for key budget documents, was not automatically publicly available. Submitting such requests did not guarantee access to the information in question, as decisions regarding requests were reached by legal officials working in the institutions from which the information had been requested. [23] This is no longer the case and according to the new Law on Free Access to Public Information (Article 7) state and local institutions are obliged to provide data related to payments which are published by the Treasury of the Ministry of Finance. Prior to the release of the database some documents, such as the budget and its execution, were available but not in open or machine-readable formats (only as PDFs). [24] With the implementation of this commitment, the data is freely accessible, apart from the following: transactions related to salaries, interest payments, principal repayments, sick leave paid by the Health Insurance Fund of the Republic of North Macedonia, payment of VAT on equipment purchased from donations, and paid reserves for the Kumanovo conflict in 2015. [25] The portal also provided information regarding public spending of local-government units, which was not available before the action plan, allowing citizens to monitor how public money is spent in their municipalities.

Media outlets in North Macedonia have already begun using the data from the Open Finance portal for their investigative work. For example, information regarding bonus payments received by the former special public prosecutor, which were not previously publicly available, was brought to public attention [26] and prompted an investigation by the Public Prosecutor’s Office’s Department for Organized Crime and Corruption in November 2019. [27] The newspaper “Focus” used the data to raise concerns over the amount paid by the ombudsman for rents, and the amounts for petrol. [28] Similarly, the Balkan Investigative Reporting Network’s (BIRN) “Prizma” media outlet used the data to report that the government spent more than EUR 26 million on media expenditures between 2010 and 2017, with 95 percent of this amount paid to only three national television channels. [29] After consulting the Open Finance portal, BIRN Prizma also published several articles highlighting the lack of information regarding freelancers who were hired to provide services by the government. Namely, by using the Open Finance portal, BIRN journalists noted that amounts have been paid for freelance services, but no information regarding the names of the freelancers or the nature of the service agreements was provided. [30] BIRN submitted a request for access to information to the government to obtain the names of the freelancers and the services they provided. Upon an initial refusal, in an appeal procedure, the Agency for Protection of the Right to Free Access to Public Information decided that these service agreements should be publicly available. [31] The President of the State Commission for the Prevention of Corruption also opened an investigation into the matter as they deemed this to be public information. [32] A few days later, a government spokesperson made the information publicly available. [33] [34] According to the country director of BIRN Macedonia, the Open Finance portal is a useful tool for journalists as it significantly reduces the time needed to collect certain information and is an important contribution towards improving transparency. [35] BIRN journalists have written several investigative stories using information available on the portal. [36]

The portal activities improved disclosure of information and allow for better scrutiny of the activities of public officials. To further improve transparency and access to information it would be beneficial for the portal to incorporate descriptions of the costs, as this will provide clarity regarding the reason for the expenditure. [37] Information on the country’s public debt is also included, albeit with some delays due to lack of human capacity and the impact of COVID-19. [38] Information on budget inflow is also missing [39] and donations, except those related to COVID-19, are not available at present. [40]

According to an IRI representative, a recommendation for future improvement is to include data from 1991 onwards, though this will be challenging, as budgetary classifications have changed over time. [41]