Transcript Local governments (lg.) in Poland

From Easy-term Budgeting Loans
to
Well-Developed Market of Debts
Agnieszka Kopańska
[email protected]
Faculty of Economic Science; Warsaw University
Poland
Local governments (lg.) in Poland Tasks
• 2489 gminas (primary education, water and waste-water
services, solid waste services, local roads, public housing, land-use
and urban planning, some social welfare functions, some cultural
functions, preventative public health)
• 374 poviats (secondary education, local roads, inspection and
permitting services, some land use planning, some cultural functions,
local labor market policy, some social welfare functions, ownership
and management of primary health care institutions – excluding
financing)
• 16 voivodships (secondary education, culture, roads,
inspectorates, regional development planning, supervision of self-
standing regional health care and environmental funds)
Lg. revenues in relation to all public
revenues
30%
voivodships
25%
poviats
20%
cities with
poviat
rights
15%
10%
gminas
5%
0%
1995 1996 1997 1998 1999 2000 2001
Legal framework of lg. indebtedness
- methods and purposes
• Methods of borrowing:
• Loans & cerdits
• Bonds
Purpouses of incuring debt:
1. debt associated with cash flow problems, has to
be repaid within the current year –short term debt
2. debt contracted to cover budget deficit of a local
government unit that has to be specified in that
unit’s budget – long term debt
Legal framework of lg.
indebtedness – debt limits
•Total amount of loan/credit instalments to be
repaid in a particular budgetary year and
potentially payable amounts under any collaterals
extended by gmina, including interest on
credits/loans, and the amount of local
government’s securities with maturity falling in
that year, may not exceed 15% of the planned
local government unit’s revenues (Art. 113, Public Finance Law)
•total indebtedness as of budgetary year end may
not exceed 60% of revenues in that particular
budgetary year (Art. 114)
Legal framework of lg.
indebtedness – debt limits
•the maximum zloty-expressed debt value
must be known on the day of transaction
•this is not applied to credits extended by
international financial institutions like the World
Bank and EBRD, and also commercial banks
administering credit lines from such institutions.
Legal framework of lg.
indebtedness - debt limits
•If the consolidated public debt (the total debt and
guarantees of the national government plus the total debt
and guarantees of local governments, minus loans and
guarantees between levels of government) exceeds 50
percent of the GDP then the planned deficit
amount of each local government unit may not be
higher than the planned deficit of State budget for
that particular year.
•More restrictive limitations occur once the public debt is in
excess of 55% and 60% GDP
Changes in real gminas’
revenues 1993-2001 (in %)
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
-10,0%
93/92 94/93 95/94 96/95 97/96 98/97 99/98 00/99 01/00
rural gminas
7,8% 9,4% 12,8% 46,6% 13,0% 1,7% -1,8% -2,5% 2,3%
rural-cities
10,6% 6,1% 11,2% 35,2% 12,4% 2,5% -1,7% -2,9% 3,1%
cities (with cities with poviat 11,9% 21,6% 1,8% 21,1% 9,8% 6,2% 9,3% 0,0% 2,5%
rights)
Lg. capital expenditures
in total expenses
1995 1996 1997 1998 1999 2000 2001
All levels
23,2% 22,0% 23,5% 22,5% 18,7% 17,4% 16,66%
Gminas
x
x
25,6% 23,9% 21,9% 20,6% 19,09%
Cities with
the poviat
rights
x
x
19,5% 19,9% 17,2% 16,1% 15,30%
Poviats
x
x
x
x
6,5% 7,5% 8,78%
Voivodships
x
x
x
x
31,7% 28,7% 27,82%
Project finance sources 1997- 2000
Project
finance
sources
Earmarked
grants
Own
revenues +
tax share +
subsidies
Deferred
surplus
Bond
revenues
1995
1996
1997
1998
1999
2000
22.99% 21.96% 26.32% 25.56%
93.81% 89.10% 62.45% 61.04% 60.54% 45.19%
0,00%
0,50%
3.09%
2.45%
2.05%
8.39%
1.01%
1.67%
0.82%
3.72%
Loans/credits 6.19% 10.40% 10.46% 12.88% 10.27% 17.14%
Source:- Raport RIO
LG’s borrowers
• Soft loans – Enviromental Funds and other
• Commercial banks
• Other investors via capital market (bonds)
Gmina’s Borrowing: 1995-1998
7 000 000
'1.000 zł in 2001 r.
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
non-commercial debt
bonds
bank credits
31.12.94
31.12.95
31.12.96
31.12.97
31.12.98
1 231 516,69
1 412 108,52
2 048 667,16
3 351 701,40
2 002 692,99
0,00
0,00
216 553,90
582 274,86
900 866,06
484 766,99 zł
727 318,83 zł
1 320 561,08 zł
1 938 729,50 zł
2 656 436,13 zł
LG’s credits In commercial
banks’ portfolio in 1995-2001
7 000 000
6 000 000
>5 years
1000PLN; 2001 r
5 000 000
1-5 years of
maturity credits
4 000 000
3 000 000
up to 1 year of
maturity credits
2 000 000
1 000 000
0
31.12.95
31.12.96
31.12.97
31.12.98
31.12.99
31.12.00
31.12.01
Number of bonds issues by value:
1996-2001
Number of issues in year
Value of Issue
in mln PLN:
(0-5>
(5-10>
(10-20>
under 20
All Issues
1996
1997
1998
1999
2000
2001
2
2
2
4
10
13
2
3
1
19
12
2
0
5
19
10
3
2
0
15
25
13
4
5
46
38
15
9
8
70
Minimum value
of issue
Maximum value
of issue
0.9
1.3
0.95
1
0,7
0,8
99.3
25
206.3
20
144
105
Some barriers for proper use of
debt by Polish LGs:
• Concerns among local officials of running into debt;
• Lack of knowledge about building long range financial
and investment policy;
• Misunderstanding of the basic rules of local finance (payas-you-go finance)
• Highly politicized governing of local authoritiescorrelation between election cycle and investment policy;
•
Unstable legal framework;