The EU provided assistance to Montenegro to support the republic’s reforms towards developing functioning institutions and core public functions, including the public finance system. Three major Components were covered:
• Budget Sector;
• Treasury Information System;
• Treasury Accounting.
The project established new processes and procedures for efficiently managing government expenditures, cash requirements and state assets and liabilities. The Ministry of Finance was assisted in adopting best international budget and treasury practices through the implementation of an integrated financial management information system and the establishment of a macro-fiscal reporting system. In addition, treasury accounting capacities have been enhanced to support medium term financial planning, increase transparency, improve state asset management and prepare the gradual transition to accrual-based accounting. This was accompanied by the development of a functioning treasury information system. Reforms in the budget sector have been supported to encourage preparation of the annual budget process within the context of a three year medium term framework with the future development of a Medium Term Expenditure Framework (an MTEF) that ultimately integrated extra-budgetary funds and capital investment projects. The critical factor in establishing an MTEF wasthe policy-budget link and it was important to ensure that the various strategy/policy documents are meshed to develop key strategic priority areas with clear priorities within each sector, which were then reflected in individual sector strategies.