FISCAL DECENTRALIZATION AND ISSUES OF MUNICIPAL BONDS. THE CASE OF ROMANIA - Polish Journal of Management Studies

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FISCAL DECENTRALIZATION AND ISSUES OF MUNICIPAL BONDS. THE CASE OF ROMANIA

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FISCAL DECENTRALIZATION AND ISSUES OF MUNICIPAL BONDS. THE CASE OF ROMANIA

Danuletiu D.C.*


Abstract

Local governments can make an important contribution to public well-being through the execution of local government policies and the delivery of public services that are important  to the local citizens. For this reason, through the local budgets are financed the public goods that are selected to be more important. But if the own revenues of the local budgets are low, the local authorities are dependent on the central ones, fact  that affect the allocation of resources by the destinations. Because of the unlimited needs, the local governments search for alternative sources of financing, like bank loans, loans from the capital market, leasing, using some collaboration formulas  with the private sector, like public-private partnerships and other financing forms. In a analysis on Romanian case, we shows that a greater level of decentralization give to local governments greater possibilities to cover local needs by attracting new  resources, also from alternative ways. (JEL: E62, H61, G21, H72)


Key words: local budget, municipal bond, fiscal decentralization.

Introduction

The importance of financial decentralization of the local communities

Local governments can make an important contribution to public well-being through the execution of government policies and the delivery of public services that are important to  the local citizens. The local budget is the main instrument of the local government authorities by which are selected the financing priorities from the socio-economic development strategies of communities. Local budgets establish the size of the expenses  by the limit of the revenues and assure the substantiation of the financial resources, encourage the local initiatives, assert the local autonomy and exercise the control over the use of local funds. In this direction, the budget should be the centerpiece  of a thoughtful, ongoing, decision-making process for allocating resources and setting priorities and direction.
The local budget represents the main instrument for ensuring the decisional autonomy of the local government authorities, for determining what local services will be provided and how they will be financed. In accord to this, decentralization helps to  make governments more accountable, allowing a better matching of public services to local needs and enhances efficiency in public sector introducing competition across jurisdictions.


The local financial autonomy depends on certain conditions [2]:
   the local government authorities should have their own monetary resources for achieving the prerogatives stipulated by law;
   the local government authorities should be allowed to establish their own revenues and expenses and to develop planned budgets;
   the central government authorities should have the control over the way of regulating and administrating the local public businesses.

The local financial autonomy leads to the implementation of some specific financial policies that describe the principles and objectives that guide the financial management practices  of local authority. These policies influence the financial decisions, lead to the development of some strategies for reaching the objectives and, furthermore, provide the standards for assessing and monitoring the performances of the financial management  system of local government.


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Summary

The local financial autonomy leads to an increased responsibility of the local government towards the citizens of their own jurisdiction, which is reflected in a faster and greater  adjustment of the resources to the local needs. Confronted with some great needs and limitation of the financial resources, local governments have the possibility to use alternative financing sources. Among these sources we find the issue of municipal  bonds which leads to obtaining some quantitative resources for relatively long periods of time. The analyze of the municipal bonds in Romania shows the fact that the access to this financing source is easier for large municipalities that have a greater  financial autonomy, but their efficient use requires the adoption by the local governments of some integrated development strategies that guide their own financial policies.


References

[1]   Blore, I., Devas, N., Slater, R.: Municipalities and finance : a sourcebook for capacity building, Earthscan, Sterling, 2004.
[2]   Labie F.: Finances locales, Dalloz, Paris, 1995
[3]   Martinez-Vazquez J., Sepulveda C., Leonardo G., Miller B.: Intergovernmental Fiscal Relations in Romania: Challenges and Options for Reform, International Studies Program Working Paper Series, Andrew Young School of Policy Studies, Georgia State  University, 2006.
[4]   Mosteanu T. , Lacatus C:M.: The Municipal Bonds - the Cause and the Effect of the Local Financial Decentralisation Growth. Romanian Case, Theoretical and Applied Economics, Bucharest, no.9/2008.
[5]   Oprea F., Lazar S.: Intergovernmental fiscal relations and local financial autonomy in Romania, Analele Universitatii din Oradea, 2008.
[6]   Schaeffe M., Yilmaz S.: Strengthening Local Government Budgeting and Accountability, World Bank Policy Research Working Paper, no. 4767, 2008.
[7]   Slusarczyk B., Investment Strategy As a Condition for Pursuing a Company's General Strategy. Annales Universitatis Apulensis. Series Oeconomica Vol.2 nr 9, 2007

DECENTRALIZAJCA PODATKOWA I  KWESTIE OBLIGACJI KOMUNALNYCH NA PRZYKLADZIE RUMUNII


Streszczenie

Samorzady terytorialne moga znacznie przyczynic sie dla dobra publicznego poprzez realizacje polityki samorzadowej i sluzbe publiczna, istotna dla lokalnych mieszkancow. Z tego  powodu, najistotniejsze dobra publiczne sa finansowane ze srodkow budzetu lokalnego. Niestety, jezeli lokalne wplywy budzetowe sa niskie, wladze lokalne sa zalezne od centralnych, ktore przyznaja srodki pod wzgledem ich przeznaczenia.
Przez wzglad na ogromne potrzeby, samorzady terytorialne poszukuja alternatywnych zrodel finansowania, jak pozyczki bankowe, pozyczki z rynku kapitalowego, leasing, wspolpraca z sektorem prywatnym, np. partnerstwo publiczno-prywatne i inne formy. Na przykladzie  Rumunii w artykule przedstawiono, ze wiekszy stopien decentralizacji daje samorzadom lokalnym wieksze mozliwosci pokrycia lokalnych potrzeb poprzez pozyskanie nowych zrodel finansowania, takze sposobami alternatywnymi.




 
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