Koncepcja skonsolidowanego wieloletniego limitu zobowiązań finansowych jednostek samorządu terytorialnego
The Concept of the Consolidated Multi-Year Limit of Financial Obligations for the Entities of Local Government

Summary/Abstract: The aim of the paper was to present an attempt of the integrated approach to the development problems of local government entities (LGE) concerning their indebtedness in a way covering two perspectives: budget and balance-sheet. Referring to the literature review, the author points to the fact that the LGE’s budget deficit can be higher than actually reported because of the mechanism of extra-budgetary financing of some tasks. The analysis of the LGEs’ budget realization reports and consolidated balance-sheets in Poland in 2017 made it possible to identify the size of budgetary and extra-budgetary indebtedness. The paper presents a proposal to augment the method employed in establishing debt limits for LGEs by introducing the extra-budgetary debt component into the formula of debt service limit. This component may be either an obligatory restriction or an optional governance rule which can be helpful in discovering the current and potential financial strains connected with the debt, strengthening thereby financial credibility and transparency of LGEs as regards their consolidated indebtedness.

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