Realising investment opportunities in Montenegro: a public sector consulting perspective Dr. Brian Portelli Human Dynamics Invest in Montenegro Invest in the Region VIENNA ECONOMIC FORUM Go South East Montenegro meeting April 2008

Human Dynamics/Basic Facts 1993: Hulla & Co. Human Dynamics KG founded 2008: Contracted Project Volume: €46million Headquarters: Vienna Subsidiaries/Associated Firms: Sofia, Bucharest, Belgrade. Business: Public Sector Consulting Leading Austrian provider of consultancy services to central and local government institutions: over 120 projects carried out in more than 30 countries Currently over 40 Ministries and specialised public agencies are serviced by Human Dynamics with over 300 consultants in the field

I.Role of FDI in development goals I. Role of FDI in development goals II. Host country conditions and public sector capacity and public sector capacity

I. Role of FDI in development goals -Export-led economic growth -Value-adding productive economic activities -Injection of capital and knowledge -Employment creation -Targeted investment in key sectors.

I. Role of FDI in development goals FDI-led growth an automatic process ? Host country location-specific advantages crucial !

II.Host country conditions and public sector capacity -business environment (risk) and investment climate -administrative, fiscal and regulatory framework -transaction costs (costs of doing business) -economic and institutional framework.

Human Dynamics in Montenegro since 1999 Implementation of Budgeting and Salary Systems Reform (EUROPEAID ) Capacity Building in Treasury Management and Fiscal Reporting (EUROPEAID ) EC Budgetary Support (EC OBNOVA ) Vocational Education and Training Assistance (EUROPEAID )

Implementation of Budgeting and Salary Systems Reform (EUROPEAID ) The objective of the project is to increase fiscal transparency and achieve better-informed decision-making within the budgeting process for more efficient allocation/use of governmental resources and to strengthen the capacity of the State administration in recruiting and rewarding skilled people needed for designing and implementing public policies. Budget system component:  Developing medium-term horizon within budgetary process and improving linkages between different aspects of public finance with strategic planning procedures  Assist further expansion of Treasury Information System to better support budget processes within MTBF. Salary system component:  Assure the implementation of the new salary system according to the law and the defined objectives  Improve transparency, internal equity and external competitiveness of the salary system  Developing VET systems in sectors having education.

Capacity Building in Treasury Management and Fiscal Reporting (EUROPEAID ) Within the overall objective of establishing new processes and procedures in managing government expenditure, facilitating the adoption of international budget and treasury best practice  Assisting the Macro-Fiscal Analysis and Forecasting Unit in the Budget Sector in developing capability in producing regular reports on the consolidated fiscal operations of government as the basis for effective debt management policy  Assistance in the add cash/debt management and asset management functions to the existing budget execution and accounting functions in the ambit of the Treasury’s recently established financial management and information system  Assistance to the Ministry of Finance to exercise more effective budgetary control over the activities of the extra-budgetary funds  Assistance to the Treasury to undertake a gradual transition from cash-based to accrual-based accounting and to prepare a preliminary balance sheet of government.

Vocational Education and Training Technical Assistance (EUROPEAID ) Developing VET systems in sectors having education provisions which are able to meet the needs of the labour market and other interest groups. As part of the improved orientation of national and regional structures towards the labour market and integration of initial and continuing VET systems within a lifelong learning provision, the following specific objectives were achieved:  Assistance with the analyses of labour market and skill requirements in key sectors  Assistance in developing training programmes, curricula, assessment and certification procedures in key sectors  Training the trainers in modern teaching and learning techniques for youth and adults  Training managers and employees in key sectors  Consolidate and disseminate programme results through stakeholder associations, draft regulations of professional qualifications and policy recommendations  Purchasing equipment for selected training institutions

EC Budgetary Support (EC OBNOVA ) Within the context of the disbursement of €40m to the government of FYROM and Macedonia for the administration of help to cover refugee costs caused by the influx of internally displaced people from Kosovo, the specific objectives of the project included:  To assist with the efficient and transparent management of the commission’s budgetary assistance to the country  To receive and analyse all relevant information and report on the use of the assistance through all channels up to the final destination  To analyse and to follow-up the budget execution of this assistance, especially the eligible costs at all state levels  To assist the Ministry of Finance in complying with all rules and conditions of the financing memorandum

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