Strengthening Public Accountability for the Fight Against Corruption (ME0084)

A brief description of the obligation

The commitment includes the establishment of a "Budget Literacy Program” to empower citizens to understand, monitor and influence public spending through knowledge and active participation.

Defining the problem

1. What problem does this commitment aim to solve?

Despite the existence of relevant legal and institutional mechanisms, fiscal transparency in Montenegro remains limited, and citizens' access to information on budget spending, planning and auditing is often difficult, fragmented or completely absent. The problem of fiscal opacity is multi-layered because it includes normative shortcomings, poor implementation, institutional inefficiency and insufficient public oversight through civic participation.

In 2023, Montenegro participated for the first time in the international Open Budget Survey conducted by the International Budget Partnership (IBP). Montenegro received 48 out of a possible 100 points, which positions it in 64th place out of 125 countries (IBP, 2023). Although basic budget documents are available (e.g. the adopted budget has a maximum of 100/100), key elements such as the Mid-Year Review and the Citizens' Budget are missing, while the level of public participation in the budget process is rated at only 13/100.

Montenegro has a legal infrastructure that supports transparent management of public finances, including the Law on Budget, the Law on Free Access to Information and real-time electronic fiscalization. However, there are some challenges in the application of the law. For example, although data on the

spending of EU funds and public procurement are formally public, in practice they are fragmented, insufficiently updated and often lack explanations of key items, which is confirmed by the findings of the NGO Institute Alternativa (Institute Alternativa, 2023).

Montenegro has formally established fiscal rules (maximum deficit of 3% and public debt of up to 60% of GDP), but the practice is different. According to data from the International Monetary Fund, the budget deficit was as high as -8.9% in 2022, and public debt exceeded 105% of GDP, which clearly indicates a decline in fiscal discipline (IMF, 2022). Although the Government has repeatedly committed to establishing an independent Fiscal Council to monitor compliance with the rules and make recommendations, its formation has not yet been implemented, creating a supervisory vacuum.

The introduction of e-fiscalization and electronic supervision of the issuance of fiscal invoices was an important step towards combating the grey economy and improving the reversibility of revenues. However, despite technical progress, analyses of the effects of fiscalization are not yet available, and it is not known to what extent this measure has led to a fundamental change in taxpayers' behavior and transparency of state revenues (Fiscal Requirements, 2023).

One of the most serious problems of fiscal opacity is the absence of mechanisms for citizen participation in the budget decision-making process.

Although the Budget Literacy Program or similar educational activities alone cannot solve the problems of non-implementation of the law, non-publication of key documents or lack of political will, they have a significant complementary role. Their purpose is to bring the budget process closer to citizens, increase their understanding of public finances and motivate them to participate more actively in monitoring and decision-making. In this way, the capacity of the public to demand accountability from institutions is strengthened, which in the long run can contribute to greater fiscal discipline and transparency.

Montenegro currently has a developed institutional and normative framework for transparent management of public finances, but does not apply it consistently. The lack of political will, the weak capacity of institutions, the lack of oversight and the almost complete marginalization of civic participation result in fiscal policy remaining non-transparent. Unless there are substantial reforms in the direction of implementing existing mechanisms and creating space for public participation, fiscal opacity will continue to undermine public trust.

1. What are the causes of the problem?
1.What are the causes of the problem?
Fiscal opacity in Montenegro stems from a combination of normative shortcomings and inconsistent application of existing laws and regulations. The transparency of public finances is often reduced to the formal fulfilment of the legal minimum, while the content and format of budget documents are not adapted to citizens.

The solution lies not only in the publication of documents, but also in their clear and understandable presentation, which would enable citizens and civil society to actively participate in monitoring budget processes and making suggestions.

2. Why do citizens not have complete and clear information on how the state spends public money?
Because key budget documents have either not been published (e.g. Mid-Year Review, Citizens' Budget), or have been published in a format that is inaccessible to the public, difficult to understand, fragmented and without additional explanation and analysis.

3.Why are these documents missing or poorly presented?
Because in public administration, there is no operational obligation to communicate information proactively, clearly and in a timely manner. The focus of the institutions is mainly on the formal fulfilment of the legal minimum, and not on transparency as a democratic value.

4.Why is the focus of institutions not on openness?
Because there is not a sufficiently developed system for monitoring and monitoring the quality of published data. Citizens and civil society are poorly involved in the decision-making process, and the media and the research sector do not have constant insight into the flows of public money. Also, the absence of an independent Fiscal Council means that there is no external control of budgetary policy.

5.Why is there no independent oversight and civil pressure?
Because supervisory institutions do not have sufficient capacity, and existing participation mechanisms are not sufficiently used. Civil society faces limited resources and public pressure remains sporadic.

6.Why is there resistance to real transparency and accountability?
Because transparency requires additional work, better planning and consistent control, while in underdeveloped accountability mechanisms, such a practice does not bring immediate incentives to institutions.

Description of the obligation
What has been done so far to solve the problem?
Montenegro has taken a number of reform steps to improve fiscal transparency, but the effects of these measures have so far been limited.

Key laws such as the Law on Budget and Fiscal Responsibility, which defines fiscal rules and directions of budget planning, have been adopted. Also, the Law on Free Access to Information formally allows the public access to budget and financial data. In addition, the Fiscal Strategy 2024-2027 envisages the establishment of an independent Fiscal Council, which would oversee the implementation of fiscal rules. The introduction of the e-fiscalization system in 2021 is an important technical reform, as it enables electronic records of fiscal invoices in real time. Also, digital portals for public procurement and budget documents have been created, which has made certain data more accessible. However, these tools work without a serious analysis of the effects.

Part of the budget documents (budget proposal, adopted budget, final accounts, SAI audits) is published on the website of the Ministry of Finance. However, key elements of fiscal transparency, such as the citizens' budget and the mid-term review of budget implementation, which are standard in developed democracies, are missing. Montenegro has made an important but insufficiently consistent start in addressing fiscal opacity. There are laws, strategies, digital tools, and international engagement, but they lack:

• The institutional will to do so,

• active supervision and

• involvement of citizens.

Without operational enforcement of the law, without real oversight and without public pressure, fiscal transparency remains more declarative, while reforms should represent a change in the way public money is planned, spent and controlled.

2.What solution is proposed?

One of the key problems of fiscal opacity in Montenegro is not only the lack of information, but also the fact that most citizens, including young people, local activists and journalists, do not know how to use, understand or monitor this information.

That is why the solution cannot be just another strategy or law, but must start with the people, that is, with the introduction of an innovative and inclusive Civic Budget Literacy Program, which aims to empower citizens to become active monitors of public spending and equal participants in decision-making on public money.

The "Civic Budget Literacy Program" is an informal educational program that, through practical workshops and digital tools:

• Trains citizens to understand how budgets are created, adopted, and executed.

• shows them where to find and analyse public spending data;

• teaches them how to advocate for their priorities in the budget;

• It empowers them to recognize suspicious spending patterns and alert the public.

The program is aimed at young people, NGOs and media who want to develop a participatory model of public funds management. The "Civic Budget Literacy Program" is not only an educational program, but also a tool of social control, which connects knowledge, data and participation.

3. What results do you want to achieve with the realization of this obligation?
The introduction of the "Civic Budget Literacy Program" can initiate a profound change in the way Montenegrin citizens perceive public money and their role in deciding on its spending. The aim of the program is not only to transfer knowledge, but to foster a new culture of responsibility and participation. When citizens realize that the budget is not an abstraction, but a plan that determines whether the school will have heating, whether the street will be lit or the health center will have a doctor, then the budget becomes a personal matter and there is a growing willingness to ask questions, seek answers and defend the public interest.

This initiative seeks to create a chain reaction for an educated citizen to become an active citizen, for institutions to feel the pressure to be more open, and for public policies to be designed in dialogue with the community. In the long run, this means stronger democracy, more resilient institutions, and a healthier economy.

1. How does this commitment promote transparency?
The introduction of the "Civic Budget Literacy Program" is a mechanism that improves transparency by empowering citizens to understand, analyze and monitor public spending. This commitment contributes to the development of an informed and engaged society, which demands institutional accountability and influences decisions on public finances. This raises the standard of openness: from the formal availability of data, to the intrinsic accountability of decision- makers.

2. How does this obligation promote accountability?
This obligation encourages the accountability of institutions because it removes the space for non-transparent management of public money. When citizens know how the budget works, how decisions are made, and where the data is located, they become an active corrective to the government.
Such pressure "from below" changes the behavior of institutions because every decision on the spending of public funds becomes a potential issue for the public. That is why this obligation not only strengthens oversight, but also forces decision-makers to act transparently and responsibly.

3. How does this task improve the participation of citizens in the definition, implementation and monitoring of solutions?
This obligation significantly improves the participation of citizens by enabling them to actively participate in all phases of the public finance management process: from defining budget priorities, through monitoring implementation, to supervising budget execution. Education enables a partnership between citizens and institutions.

Commitment Planning

Key Steps | Expected Outcomes | Expected period of Completion

Needs analysis and curriculum development | Detailed analysis of the existing level of budget literacy and identification of target groups Development of an adapted curriculum and teaching methodology Identify the resources and partners needed to implement the program. | Q4 2026 | Holder: Ministry of Finance, NGO sector Player

Formation of partnerships and training of trainers | Establishing cooperation with institutions, NGOs and the media Selection and Training of Key Trainers to Conduct Trainings Preparation of training materials and teaching tools | Q2 2027 | Holder: Ministry of Finance, NGO sector

Pilot program and evaluation | Implementation of pilot workshops/educatio n Collecting feedback from participants and partners Creating an evaluation report and adjusting the program as needed | Q4 2028 | Holder: Ministry of Finance, NGO sector

Monitoring and reporting of results | Regular reports on the number of trained citizens, initiatives launched and impact on local policies Monitoring Changes in Budget Transparency and Civic Participation Recommendations for further development and sustainability of the programme | Q1 2029 | Holder: Ministry of Finance, NGO sector