Stress Tests as a Tool to Assess the Risk of Public Expenditure on Debt Servicing Increasing at Local Government Entities

2019 ◽  
Vol 17 (2) ◽  
pp. 205-224
Author(s):  
Marta Postuła ◽  
Miroslaw Czekaj ◽  
Jaroslaw Klepacki
Keyword(s):  
Local Government ◽  
Interest Rates ◽  
Local Governments ◽  
Public Expenditure ◽  
Stress Test ◽  
Stress Tests ◽  
Government Sector ◽  
Development Expenditure ◽  
Low Levels ◽  
The Eu

National and local government's public debt is of special interest to economic sciences. With interest rates in the EU countries now at historically low levels, there is risk of a trend change causing development expenditure to be crowded out from budgets in favour of debt servicing costs. The analysis (stress test) of the sensitivity of debt servicing costs in the local government sector in Poland to an unexpected growth of market interest rates above the values forecasted by the MoF confirms that local governments are exposed to interest rate growth risk, and consequently to the risk of their budgets incurring unplanned expenditure.

Sustainability of Local Government Sector Debt. Evidence from Monte-Carlo Simulations

2016 ◽  
Vol 14 (1) ◽  
pp. 115-132 ◽  
Author(s):  
Krzysztof Kluza
Keyword(s):  
Monte Carlo ◽  
Interest Rate ◽  
Local Government ◽  
Interest Rates ◽  
Local Governments ◽  
The European Union ◽  
Investment Policies ◽  
Government Sector ◽  
Systemic Problems ◽  
The Impact

The financial standing of local governments across the European Union was strongly affected by the economic crisis. The local government sector conducted vast investment policies reaching 10.2% of all investments in the EU countries in 2010. However, at the same time its indebtedness expanded significantly. The current low interest rate environment makes the sector vulnerable to future interest rate increases. The presented research analyses the impact of several scenarios of interest rate changes in Poland on the local governments’ ability to service their current debt burdens. Simulations are conducted with the Monte Carlo method. Some scenarios indicate a high vulnerability of local governments to adverse changes in market interest rates, but only if they are combined with a reduction of sector’s operating surplus. Such an economic setup may give rise to systemic problems for the whole public sector.

Conditions and prospects for cooperation between Polish and Ukrainian local governments

2021 ◽  
Vol 19 (4) ◽  
pp. 221-241
Author(s):  
Mariusz W. Sienkiewicz
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Economic Life ◽  
The European Union ◽  
Public Authorities ◽  
The Public ◽  
Political Transformations ◽  
The Social ◽  
Common Goals ◽  
The Eu

The fact that Poland and Ukraine share a border, the convergence of the political goals of the peoples of both countries, and the constant efforts towards the development of democracy and decentralisation of public life determine the need to intensify cooperation in various areas of the functioning of society and the economy. An important sphere of cooperation is the public sector, in particular at the level of local government. The local government cooperation of both countries was already visible at the beginning of the social and political transformations after 1990. The development of this cooperation, with varying results, took place in the 1990s and, to an even greater extent, after Poland’s accession to the European Union. In the last three decades, local and regional communities in Ukraine have become an important partner for Polish local governments, both at the local and regional levels. The local government cooperation that has been implemented is based on the diversification and multidimensionality of forms and models. Some result from legal regulations, while others are based on mutual experiences, previous contacts, and sympathies of public authorities. The aim of the study is to analyse and present the conditions and forms of Polish-Ukrainian local government cooperation. The aim is also to show the barriers to cooperation and to define proposed solutions to improve partner contacts of territorial units. The local government cooperation of the two countries is undoubtedly hindered by the fact that Ukraine is not a member of the EU, and often by mutual misunderstanding and non-acceptance of historical experiences. On the other hand, common goals at different levels of social, public, and economic life are a significant factor motivating parties to increase cooperation and achieve a synergistic effect thanks to it.

Challenges of the Implementation of the European Charter of Local Self-Government in Romania’s Legislation

2018 ◽  
Vol 16 (4) ◽  
pp. 873-893 ◽  
Author(s):  
Tudor Cristian Ticlau ◽  
Bogdan Andrei Moldovan ◽  
Cristina Maria Hintea
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Local Governance ◽  
East European ◽  
Significant Power ◽  
Financial Autonomy ◽  
Current Article ◽  
State Of Affairs ◽  
European Family ◽  
The Eu

The European Charter on Local Self-government is a defining document for local governments across the EU and was a guideline for developing a framework of local governance based on local autonomy, decentralization that is close to the citizens. It was especially important for Central and East European Countries as they faced the challenges of a total overhaul of their administrative systems after the fall of the communist regimes. Romania fits into this picture as a late comer to the European family, with an administrative system that transitioned slowly from a hyper centralized arrangement to one that offers significant power to local governments. After 20 years since the ratification of the Charter, local government in Romania displays mixed elements, between progressive (protection of local authorities) and conservative (consultation of authorities, financial autonomy) in relation to the charter recommendations. The current article is an analysis on the state of affairs concerning local governance in Romania using the Charter as the main theoretical framework.

Tighter global money risks exposing banks’ fault lines

2019 ◽  
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Financial Services ◽  
Stress Test ◽  
The United States ◽  
Central Banks ◽  
Mortgage Lending ◽  
Stress Tests ◽  
Content Type ◽  
Credit Cycle

Significance Addressing the concerns this raises for banks' profitability, the Financial Services Agency announced that it would stress test Japan's 105 regional banks in mid-2019. Central banks in Japan, the euro area, Sweden, Denmark and Switzerland have cut their policy rates more aggressively than other countries since the 2008-09 financial crisis. Authorities have done this to spur banks to lend more, but in doing so have increased banks' risk-taking. Impacts Central banks with policy rates close to zero or negative will require higher countercyclical buffers from banks failing stress tests. In Japan, banks will be highly exposed to asset price fluctuations when the BoJ winds down QE. The BoJ holds a large amount of US collateralised loan obligations, exposing it to a credit cycle downturn in the United States. The less efficient euro-area banks and high-deposit banks involved in syndicated loans will be most at risk when interest rates rise. Danish, Swedish and Swiss banks are vulnerable to higher rates and a property crash because of their large mortgage lending portfolios.

The Public Debt of French Local Government

1985 ◽  
Vol 5 (3) ◽  
pp. 387-399 ◽  
Author(s):  
Pierre-Henri Derycke ◽  
Guy Gilbert
Keyword(s):  
Local Government ◽  
Interest Rates ◽  
Public Debt ◽  
Local Governments ◽  
Central Government ◽  
Tight Control ◽  
The Public ◽  
Policy Measures ◽  
The Impact

ABSTRACTAfter a sharp increase, the public debt of French local communities has been stabilized in real terms: its amount reached 54 per cent of total public debt in 1980. In the French institutional framework, local government borrowing policy is under the tight control of central agencies. An econometric model of the borrowing behaviour of local governments since 1965 is presented; it emphasizes the role of internal determinants of local debt (needs for investment, self-financing ability of governments), external constraints (e.g. interest rates and the financial resources of lenders, such as households savings), and finally the impact of macroeconomic policy measures from the central government.

scholarly journals Overcoming challenges faced by local governments in creating a resilient built environment in cities

2016 ◽  
Vol 25 (5) ◽  
pp. 628-648 ◽  
Author(s):  
Chamindi Malalgoda ◽  
Dilanthi Amaratunga ◽  
Richard Haigh
Keyword(s):  
Sri Lanka ◽  
Local Government ◽  
Built Environment ◽  
Local Governments ◽  
Expert Knowledge ◽  
Theory And Practice ◽  
Indian Ocean Tsunami ◽  
Sri Lankan ◽  
Content Type ◽  
Government Sector

Purpose Although, a number of initiatives have been taken after the devastating Indian Ocean tsunami to institutionalise disaster risk reduction (DRR), gaps still exist in the Sri Lankan local government sector. Even after ten years, local governments are still struggling to overcome a number of challenges in relation to making resilience in the built environment. DRR has not yet been properly integrated into the local government system and, as a result, poses a significant challenge. Accordingly, the purpose of this paper is to discover the hindrances for local governments in creating disaster resilient built environment within cities and to propose ways of overcoming the identified limitations. Design/methodology/approach In total, 15 semi-structured interviews were conducted among experts from Sri Lanka who are involved in disaster management, local governments and built environment fields of study. The interviews were conducted with the intention of gaining expert knowledge pertaining to this field of study. The interviews were mainly designed to capture the current practices for instigating DRR initiatives within Sri Lanka, the role of local governments in creating a disaster resilient built environment and the associated challenges, and ways of overcoming such challenges to ensure an effective contribution to city resilience. Findings Primary data discovered 36 challenges along with some associated sub-challenges. The challenges were categorised under eight main themes: legal framework; lack of adequate tools, techniques and guidelines; human resource constraints; funding constraints; weaknesses in the internal systems and processes; weaknesses in the external systems; community engagement; and other challenges. The paper analyses these challenges in detail and proposes a set of recommendations to overcome the challenges in order to create disaster resilient built environments within cities. Research limitations/implications The paper provides a descriptive analysis of how the Sri Lankan local government sector could overcome the underpinning challenges of contributing to disaster resilience in the built environment and no comparative studies were conducted with in other tsunami affected regions. Furthermore, the paper analyses partial findings of a broader research, which was aimed at developing a framework to empower local governments in creating a disaster resilient built environment. Originality/value The paper provides an extensive analysis of the challenges faced by local governments in contributing to the resilience of their built environment and proposes how these challenges could be overcome while making a worthwhile contribution to both theory and practice. Accordingly, the paper recommends major changes in policy and practice with respect to bringing local governments into DRR.

scholarly journals THE EFFECT OF INDIVIDUAL MORALITY AND INTERNAL CONTROL ON THE PROPENSITY TO COMMIT FRAUD: EVIDENCE FROM LOCAL GOVERNMENTS

2016 ◽  
Vol 31 (1) ◽  
pp. 208 ◽  
Author(s):  
Novita Puspasari ◽  
Eko Suwardi
Keyword(s):  
Local Government ◽  
Internal Control ◽  
Local Governments ◽  
Internal Controls ◽  
Accounting Fraud ◽  
Moral Principles ◽  
Quasi Experimental ◽  
Local Government Level ◽  
Low Levels ◽  
Government Level

This paper aims to examine the influence of individual morality and internal controls on individuals’ propensity to commit accounting fraud at the local government level. This is a quasi- experimental research paper. Individual morality and internal controls are hypothesized to be having an interaction with each other in influencing the propensity to commit accounting fraud. Individuals who have low levels of moral principles are hypothesized to have the tendency to commit accounting fraud in the absence of any internal controls. To test this, a 2x2 factorial experiment was conducted involving 57 students from the Masters in Economics Development programme at Gadjah Mada University. The result shows that there is an interaction between individual morality and internal controls. The absence of internal controls does not cause an individual with high moral principles to commit accounting fraud. However, individuals with low morality levels tend to commit accounting fraud when internal controls are absent. Keywords: Accounting Fraud, Morality, Internal Controls, Local Government

scholarly journals Implementation of Development Charge by Local Government of Malaysia: Implementation and challenges

2017 ◽  
Vol 2 (5) ◽  
pp. 459
Author(s):  
Nor Azalina Yusnita Abdul Rahman ◽  
Mudirah Shaharudin ◽  
Nurulhuda Ali ◽  
Siti Fairuz Che Pin
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Publishing House ◽  
State Level ◽  
Primary Data ◽  
Exploratory Research ◽  
Property Development ◽  
Public Facilities ◽  
Government Sector ◽  
Interview Session

Local government plays a major role in property development in Malaysia. Local government in Malaysia is enacted under the Local Government Act 1976 to provide public facilities and amenities to local people as well as to control property development at the state level. At the current practice, development charges have been imposed on property project carried out in accordance with the provisions of Section 32 of the Town and Country Planning Act 1976 (Act 172). The main purpose of the development charges is to provide and improve infrastructures, public facilities, and amenities as well as the wellbeing of the development areas. The charges would be levied to developers once the project approved specifically for the conversion of land use, the increment of plot ratios and density, which would increase the land value. The purpose of this research is to identify the issues and challenges in the imposition of development charges to improvise the current methods practiced. This exploratory research aims to come out with the best practices on development charge. A qualitative semi-structured technique will be used that focus on six (6) states in Malaysia which consists of 26 local governments that are currently implementing the development charges. All the primary data were gathered from respondents will be analyzed by using content analysis through interview session. There were four (4) main issues reveals from this research whereby lack of awareness among developers top the chart. Meanwhile, amongst the challenges faced by the local government pertaining to the development charges implementation are to strengthen the implementation procedures of development charges as well as and to increase the understanding of the importance of development charges. The findings, therefore, will come out with full understanding towards the practice of development charges in Malaysia among government sector, developers and other relevant parties.Keywords:development charge;local government; market value; developerISSN: 2398-4287© 2017. The Authors. Published for AMER ABRA by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia.

Debt Refunding: The State and Local Government Sector

1979 ◽  
Vol 7 (3) ◽  
pp. 323-337
Author(s):  
William E. Mitchell
Keyword(s):  
Interest Rates ◽  
Local Governments ◽  
The State ◽  
Government Sector ◽  
General Obligation ◽  
Local Sector ◽  
State And Local Government ◽  
State And Local ◽  
Private Corporations ◽  
Average Size

Most corporate debt refunding is motivated by interest savings, but similar studies for the state-local sector have found little correlation between cyclical interest rates and refunding. Interest savings is only one reason for refunding and there are possible institutional constraints on state and local call-refunding activities. When annual refunding is deflated by outstandings, the state-local demand to refund is highly sensitive to cyclical interest rates (elasticity coefficient of −2.82 for 1901–1975). This characteristic is also typical for general obligation and nonguaranteed bonds considered separately, and for both “large” and “average” size issues. Interest savings appears to be an important motivation for state-local refunding activity. Finally, state and local governments issue refunding debt in approximately the same relative proportions as private corporations.

Is the conflict container full? Problems of fiscal sustainability at the local government level in Hungary

2010 ◽  
Vol 60 (1) ◽  
pp. 49-77 ◽  
Author(s):  
A. Vigvári
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Fiscal Federalism ◽  
Central Government ◽  
Fiscal Sustainability ◽  
Fiscal Discipline ◽  
System A ◽  
Government Sector ◽  
Short Run ◽  
Local Government Level

The paper discusses the reasons and possible resolutions of the contradictions in the Hungarian local government system, and proposes methods to resolve them. The nature of the Hungarian system cannot be described by classical normative theories of fiscal federalism. The operation of Hungarian local governments is determined rather by the decentralisation of conflicts stemming from the reduction of state responsibilities, and the resulting municipal behaviour. The second generation theory of fiscal federalism pays particular attention to the institutional guarantees of fiscal discipline shown by the lower levels of government sector. Actors in the Hungarian system, a system that functions as a ‘conflict container’, try to offset the financial pressures, weighing heavily on them by borrowing and by contingent liabilities. While central government has transferred new duties to local governments from year to year, it has reduced the amount of fiscal subsidies. Until a long-term comprehensive reform is implemented, consequent risks must be treated in the short run, as well.

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