In general, The Ministry of Culture distributes public funds for culture on the basis of an annual plan. The allocation of the overall state budget to different sectors is prescribed by law (annual Law on the National Budget).
The Law on Local Self Government (2002) re-allocated some responsibilities to the municipalities, such as: accomplishing and development of local interest in culture; institutional and financial support of cultural institutions and projects, preserving folklore, customs, old crafts and similar cultural values; organising cultural events; encouragement of various specific forms of art.
According to the Decision on the Network of National Institutions in the Field of Culture, 64 cultural institutions are considered local institutions. This means that the local authorities are responsible for financing some of the basic costs (running costs etc.) but, on the other hand, the salaries are still subsidized by the Ministry of Culture. The local institutions can apply for annual funding from the Ministry of Culture for programmes and specific projects.
The whole process of the annual funding of the so called national interest in the cultural field has been criticised for years by some intellectuals, cultural workers and NGO’s, especially the programme for funding publishing houses, film, visual arts etc. The main points of criticism were on the grounds of insufficient transparency, that the biggest percentages of the funds were being allocated according to “party standards” and to people and firms close to the ruling political party, insufficient financial indicators for the projects etc. At the same time, in 2014-2017 the Ministry of Culture did not publicly announce members of the commissions who decided on the allocation of public funds. Furthermore, there were no annual reports of any kind, especially financial reports or any kind of financial information about the projects financed through the annual competitions.
In 2017, for the first time in many years, the annual funding was organised on a transparent basis, with publicly announced expert commissions and with final financial reports about the projects financed through the annual competitions. The new National Strategy for Cultural Development 2018-2022 and the new Law on Exercising the Public Interest in Culture (which is in preparation) foresee additional reforms in the annual funding (two or more public competitions per year, a public call for members of expert commissions, limits in the number of applications per applicant, introduction of “arm’s length principle” where possible etc.). However, the draft of the new Law on Exercising the Public Interest in Culture is in the Parliament for more than two years and hasn’t been put on its agenda yet.