Digitalization of Political Finance Reporting (MK0195)

Brief Description of the Commitment

The aim of the commitment is to enable systemic transparency of funding political parties because it has been identified that the current manners of financing political parties create a favorable environment for corruption. Namely, through the financing of political parties, opportunities are opened for the creation of strong connections and strong positions that can later (from the position of the government-donor) be used for corruption. Therefore, in order to strengthen the supervision by the institutions, but also to enable the monitoring of funding by citizens, it is proposed to establish systemic transparency of funding, which means access to the data from the funding of political parties in one place in an open format, but also to simplify the form, content and method of financial reporting of political parties by revising the form and content of the Register of Donations, Report on Donations Received, Annual Financial Report and reports during election campaigns.

Problem Definition

1. What problem does the commitment aim to address?

In accordance with the Law on financing political parties in the Republic of North Macedonia, the sources of financing of political parties and their expenses are public and transparent and subject to control by state authorities. In order to fulfill transparency in financial operations, the parties should publish the following documents: • Register for donations, which contains the name of each individual donor, the type and value of the donation, as well as the date of receipt of the donation; • Report on received donations; • Annual financial report, which contains the financial operation of the account of the political party, as well as the sub-accounts of the local branches and the sub-account of the party research-analytical center; • Annual account for financial operations; • For election campaigns: total financial report for the campaign. The financing of political parties, if it is not transparent, creates an environment in which the risk of corruption increases. If the legislation and the audit by the institutions fail and do not provide transparency of the data on the money, which the parties receive and spend, then the probability of corruption is high. In accordance with the Law on financing of political parties in the Republic of North Macedonia, the sources of financing of political parties and their expenses are public and transparent and subject to control by state authorities. On the other hand, the current regulation prescribes non-digital submission of financial reports, which makes it difficult to monitor the financing of political parties by the supervising institutions. The current way of reporting includes scanned reports submitted on paper, which are not machine-readable and cannot be easily and quickly entered into the database but require labor-intensive and lengthy work that leads to inefficient use of human resources in institutions. Institutions are slow to respond because the data is not available in a digital open format in the form of datasets, which does not enable rapid, automated analysis of report data. At the same time, civil society cannot timely and early warn about possible corrupt practices that appear through the financing of political parties. The supervision over the financial and material operations of political parties is carried out by the SAO. Documents related to the financial operations of political parties are also submitted to the State Commission for Prevention of Corruption (SCPC), Internal Revenue Service (IRS), State Election Commission (SEC), Ministry of Finance (MoF), which also have a legal obligation to publish the data.

2. What are the causes of the problem?

In addition to the legally stipulated forms of publishing the financial reports of political parties on the party websites, as well as on the websites of the institutions responsible for their work, there is no established format for presenting the finances of political parties in the RNM that would be unified and simplified for search. Accordingly, North Macedonia cannot be said to have a sufficiently transparent and easily accessible reporting system for political party financing, and it is necessary to work on its improvement and advancement. When collecting financial data inside the party, but also when reporting them to the institutions and the public, it is necessary to take advantage of digitalization. Introducing an integrated software solution, where an authorized person from the party can submit financial reports directly from their spreadsheets, will significantly ease the administrative burden of this process.

Commitment Description

1. What has been done so far to solve the problem?

So far, no efforts have been made to digitize the process of filling out reports of political parties related to regular and election financing of political parties and other entities involved in an election campaign, in terms of the software solution. Until now, the prescribed formats for preparing reports of political parties related to regular and election financing of parties and other entities involved in an election campaign are in "Word" or "Excel" format.

2. What solution are you proposing?

A software solution will be made with this commitment that will enable the preparation of financial reports directly on an online system. In this way, at the same time, the institutions will have all the data in a digital format in the form of data sets that can be easily analyzed and processed for the implementation of their legal competences in exercising control and monitoring the financing of political parties thereat. Political parties will be able to quickly and efficiently prepare and electronically submit reports in the prescribed format. The public will have access to data sets at the same moment when the reports are submitted to the competent institutions.

3. What results do we want to achieve by implementing this commitment?

The implementation of the commitment will enable systemic transparency of the financing of political parties. Through a digital solution for the preparation of financial reports, access to a database needed for the analysis of the financial data of political parties will be facilitated, which will strengthen the supervision by the institutions, but also enable the monitoring of the financing of political parties by the public. Through the establishment of systemic transparency of funding, access to the data from the funding of political parties in one place in an open format will be enabled, as well as simplification of the form, content and method of financial reporting of political parties by revising the form and content of the Register of Donations, Report on received donations, Annual financial report and reports during election campaigns.

Commitment Analysis

1. How will the commitment promote transparency?

Investing in digital technologies to disclose financial reports of political parties is one way to increase transparency. In many democracies (e.g. the United Kingdom, Estonia, Latvia, Finland, Norway, Sweden, the United States of America, Canada, Australia, etc.) the benefits of digitalization are actively being used, so that political parties report online and send reports to supervisory bodies, who then make these reports publicly available on their website. Such an online reporting system in many countries is also connected to other systems through data sharing, such as the tax system, the population system and the business register, whereby additional cross-checking of data from different databases can give certain indications of the existence of corruption and illegal transfers.

2. How will commitment help foster accountability?

Full disclosure of financial information of political parties can also serve as a barrier to reduce unwanted influences on them. According to GRECO (Group of States Against Corruption), the system that does not ensure proper disclosure of the sources of income and accounts of the parties, often has difficulties in supervising the application of the laws regulating the financing of political parties and campaigns, as well as in the implementation the necessary sanctions. At the same time, it is necessary to emphasize that the publication of the data itself are not proof of the financial transparency of the political parties. According to the definition of the U.S. Securities and Exchange Commission, financial transparency implies timely, meaningful and reliable disclosure of financial performance.

3. How will commitment improve citizen participation in defining, implementing, and monitoring solutions?

Financial transparency of political campaigns is one of the most important features of functional democracies. It is the basis for ensuring accountability of political parties and a tool for voters - to make informed decisions more easily, and for institutions to effectively supervise the work of political parties therein.

Commitment Planning (Milestones | Expected Outputs | Expected Completion Date)

4.1.1 Identified by-laws related to the financing of political parties adopted by the Minister of Finance and legal bases for digitizing the procedure for electronic preparation of reports | 1. Prepared list of bylaws related to financing of political parties adopted by the Minister of Finance and legal bases for digitizing the procedure for electronic preparation of reports 2. Defined dynamics for amendments to by-laws related to the financing of political parties in the direction of digitizing the procedure of financial reports’ preparation related to regular and election operations of political parties (and other entities involved in election campaigns) | March 2024

4.1.2 Adopted new bylaws related to financing of political parties which are adopted by the Minister of Finance | 1. Established working group for preparation of new formats for financial reporting 2. Drafted by-laws related to the financing of political parties, which are adopted by the Minister of Finance | June 2025

4.1.3 Prepared software solution for electronic filling of reports of political parties related to regular and election financing of political parties and other entities involved in an election campaign | 1. Prepared technical specification for software solution 2. Development of a software solution 3. Testing of a software solution 4. Implementation of a software solution in | September 2024 – March 2025

4.1.4 Enabled electronic submission of reports of political parties related to regular and electoral funding of political parties and other entities involved in an election campaign to the institutions in accordance with the laws | 1. Adopted amendments to the Electoral Code and the Law on Financing Political Parties in order to enable the electronic submission of reports using a digital certificate for signing 2. Activation of a module within the developed software solution for electronic submission of reports to the institutions in accordance with the laws (SCPC) | June 2025

4.1.5 Political parties are trained in electronic preparation and submission of reports related to regular and electoral funding of political parties and other entities involved in an election campaign to the institutions in accordance with the laws | 1. Developed manuals for software solution usage 2. Conducted trainings for political parties on electronic preparation and submission of reports related to regular and electoral funding of political parties | April – June 2025

4.1.6 The media and civil society organizations are trained to use the data from the software solution for financing political parties | 1. Conducted trainings for the media and civil society organizations on the use of data from the software solution for financing political parties | September-December 2025