Adjusting Fiscal Decentralization Programs to Improve Service Results in Bulgaria and Romania


George M. Guess is the director of research for the Open Society Institute’s Local Government and Public Service Reform Initiative and acting director of the Department of Public Policy at Central European University in Budapest, Hungary. He was the public budgeting team leader for a USAID-financed local government project in Romania from 2003 to 2004 and served as public budgeting specialist on the USAID-financed local government project in Bulgaria (1997–99) and on the British-financed Bulgarian social protection reform project at the Ministry of Labor and Social Protection (2000). An earlier version of this paper was presented at the Association for Budgeting and Financial Management conference in Washington, DC, November 10–12, 2005.


Fiscal decentralization programs are works in progress, and expenditure roles often need to be adjusted to improve service delivery. The Balkan countries of Romania and Bulgaria, both needed for accession to the European Union in 2007, must demonstrate positive results from their fiscal decentralization programs in the social services area. Focusing on social service delivery, this paper explores how the design of fiscal decentralization programs, in the form of assigning intergovernmental expenditure roles and responsibilities, affects service performance. The authors conclude that fiscal decentralization requires the proper assignment of authority to match expenditure responsibilities and the policy and administrative capacity to carry them out.