Financial Standing of Local Governments – the End of the Economic Downturn Impact?

Krzysztof Kluza

Abstract


Since 2013, the financial standing of local governments (LG) has been gradually improving in Poland. Their debt ratios have decreased and debt service capacity improved remarkably. The analysis of individual LG categories indicates that the progress is not uniform. The most modest recovery was in the category of towns with county rights. The new statutory debt limit created a space to increase their debt, which was not accompanied by adequately strong growth in operating surpluses. At the end of 2015, ca. 15% of towns with county rights crossed the alarming values of debt indicators and they are noticeably exposed to a risk of interest rates increases. The differences between LGs with sound risk profile and LGs with inferior risk profile are growing also for the rural boroughs and the counties. As a result, despite an average improvement in financial ratios for the LG sector, several dozen entities remain in the financial situation even more difficult than in the years 2011–2012.


Keywords


local governments; ratio analysis; debt

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DOI: http://dx.doi.org/10.17951/h.2017.51.4.143
Date of publication: 2017-12-08 15:26:37
Date of submission: 2017-04-22 16:16:17


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