Legal consequences of the standards of local government debt in a case of the act on public finance

There are no rules for debt management and it’s can lead to uncontrolled growth of local budget debt. It is therefore necessary to consider the introduction of an instrument to monitor the indirect debt - debt generated by local legal entities and companies with the participation of local government units (hereinafter: JST). Analysis should be individual debt ratio after one year of its operation and draw practical conclusions. It should monitor local government debt indirectly and introduce reporting the debt on an annual basis with information on warranties, agreements or multi-annual support contracts for the provision of services that impact on budgetary expenditure. Some problems with debt management by local governments. arise not so much from bad financial policy JST, but some of the specific application of the law. Local governments are cumulative free cash while incurring debt.

Sylwia Gwoździewicz