Managing Local Public Debt in Transition Countries: An Issue of Self-Control
University of Fribourg - Faculty of Economics and Social Science
affiliation not provided to SSRN
Financial Accountability & Management, Vol. 25, Issue 3, pp. 305-333, August 2009
One and a half decades after the end of a centralised regime in Central and Eastern Europe, the policy literature on local debt management in transition economies reveals that there is a general confusion about the appropriate use of debt finance at the municipal level. The literature is mainly concerned with institutional borrowing restrictions and sanctions against excessive debt. Both emphasise the responsibility of the centre and consider local government unable to pursue a sound financial management without central patronage. Breaking with the traditional focus on budget discipline, this study advocates budget responsibility. Favourable credit ratings and compliance with legal norms are necessary but not sufficient conditions for municipalities to borrow. Successful financial management requires a more proactive attitude in which local governments adjust their investment policy to their financial capacity, assessing the costs and benefits of each investment project.
Number of Pages in PDF File: 29Accepted Paper Series
Date posted: October 8, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 1.203 seconds