External Funding Sources for Capital Expenditure by Poland’s Municipalities
Journal Title: Zeszyty Naukowe Wydziału Zamiejscowego w Chorzowie Wyższej Szkoły Bankowej w Poznaniu - Year 2016, Vol 18, Issue
Abstract
The heavy burden of public tasks that local governments are supposed to perform while running low on their own revenues and hence incurring more and more debt means that they increasingly often have to resort to external funding sources. At the same, there is a growing pressure from local communities to better meet their needs and aspirations, pushing town halls to use non-standard funding instruments. The article outlines the key statutory and non-statutory public tasks assigned to municipalities (being Poland’s basic local government unit), and examines the sources of funding, other than a municipality’s own revenue, used to finance the performance of these tasks. For the study, it was assumed that most external funding comes through credit and loans, yet it has to be pointed out that more and more municipalities utilize such debt instruments as municipal bonds. Although the issue has received extensive treatment in Polish-language literature, an increasing number of municipal governments run into excessive debt and have to institute financial recovery plans. The paper employs data obtained from the Regional Audit Offices (RIO), the credit rating agency Fitch Ratings, and the Ministry of Finance to analyze the period spanning from 2009 to the first quarter of 2016. The paper discusses the primary funding sources, such as credit or loan, alongside less frequently used instruments, such as public-private partnership, while at the same time describing the major criteria for the selection of debt instrument, and its likely benefits for the local community.
Authors and Affiliations
Marta Łakomy-Zinowik
Keywords
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