Chapter four: Economic governance and management local authorities. Indeed, because of lack of capacity, the MoLG has been unable to undertake performance assessments of the activities of the local authorities which it funds. 126 iii. Recommendations 453. The APR Panel recommends that: • Instead of a top-down budget planning process, Lesotho should move to a bottom-up approach as envisaged in the MTEF. In addition to facilitating meaningful public participation in the budget process, by integrating budget planning and control, this will improve transparency in service delivery and accountability to stakeholders at various levels. (MoFDP, MoLG, district administrators) • High dependence on SACU revenue and donor support is a factor that can adversely influence the planning and implementation of development programmes and the government budget. This calls for efforts to improve domestic resource mobilisation through measures like improving tax administration; issuing and selling treasury bills; and PPPs. At the same time, Lesotho should engage in dialogue with donors to improve the quality of aid and predictability, as the way aid is delivered and managed can significantly influence its impact on development. Government and donors should arrive at a limited set of mutually agreed aid conditions based on national development strategies and donors should improve the predictability of aid by providing the government with regular, timely, indicative information on planned support. (MoFDP, MoLG) • Budget implementation has frequently fallen below targets, especially in the area of capital expenditure and the use of donor funds. Lesotho needs to implement the recently adopted public sector management reforms, including the MTEF, and build human capacity to ensure that resources are adequately used and that projects are implemented timeously. (MoFDP, MoLG) • Lesotho should improve fiscal decentralisation by devolving increased revenue mobilisation powers and expenditure assignments to local authorities, which should have coordinated revenue and expenditure plans. This calls for the harmonisation of regulations governing tax assignments. Currently, while the Local Government Act and regulations clearly empower local authorities to collect taxes, other regulations confine these powers to the MoFDP. Contrary to the argument, by some central government officials, that fiscal decentralisation is not feasible in view of the size of the country, decentralisation of revenue and expenditure responsibilities should improve service delivery as well as transparency and accountability at the local level. (Parliament, MoFDP, MoLG) • In addition to enforcing rules and procedures on accounts and regular assessments of budget performance and reporting, Lesotho should enhance the role of oversight bodies like the OAG and the PAC in public finance management. This needs to be an integral part of the PSIRP, which should be rigorously implemented. (Parliament, all ministries, local authorities)