A set of rules and mechanisms to monitor and limit local government debt. They can take the form of fiscal rules, direct control from central government given by law or based on cooperative negotiation between the levels of government.
Published in Chapter:
Local Government Development in the Czech Republic: Dilemmas and Challenges
Romana Provazníková (Faculty of Economics and Administration, University of Pardubice, Czech Republic), Lucie Sobotková (Faculty of Economics and Administration, University of Pardubice, Czech Republic), and Martin Sobotka (Faculty of Economics and Administration, University of Pardubice, Czech Republic)
Copyright: © 2021
|Pages: 21
DOI: 10.4018/978-1-7998-4978-0.ch009
Abstract
The chapter presents a short overview of the most relevant issues of local government's existence in the last 30 years in the Czech Republic. During this period, the Czech Republic has implemented reform of public administration in favour of greater decentralisation for local governments: increasing their responsibilities, creation of a new local government level-regions. The Czech Republic is one of the countries in the EU with the smallest average size of the municipality expressed in terms of population. This affects the pattern of local government financing and efficiency of local administration in general. The combination of small population size, small volume of the budget, lack of qualified staff, and incompetent decisions of the municipality representatives may lead to serious problems of indebtedness. To avoid this, central governments monitor municipal debt by various set of indicators. Case studies presented in the chapter indicate that even adequate regulations and monitoring mechanism do not ensure risk of municipal indebtedness.