Decentralization and Management of Local Finance: Integrating New Public Management

Abstract

At the end of the 1980s, decentralization was a priority for many developing countries. This decentralization concerns the transfer of competence from the State to elected representatives of local authorities, or appointed in the event of administrative and financial inefficiency. From the point of view of the overall dynamics of the socio-political and macroeconomic reforms undertaken, decentralization is perceived as a new approach to local development, which takes charge of their own needs and their mobilizable resources.
Madagascar is rather decentralized, to achieve medium and long-term development prospects. Within the local public administration, for the sake of equity, the state, through the decentralization process, grants financial autonomy and budgetary support, through the fiscal equalization system.
Local taxation is based on the distribution of jurisdiction and local financial autonomy. The power of the locality then lies in the diversity and size of the existing fiscal resources, which will subsequently encourage public investment. Thus, the autonomy of local finances allows them to define their own revenue and expenditure budgets, while respecting the regulations in force. Indeed, the place and authority of a local elected official in his administration will depend on his model of fiscal choices and optimal taxation (Leviathan model and political support model).
New Public Management is a reform of public administration, aimed at introducing principles and methods from the private sector into public organizations. Qualified as "managerialist", this application of new methods also requires a new managerial concept which is the reform of local finances and the establishment of budgetary performance.