LAW REGULATION OF CALCULATION OF THE INDIVIDUAL DEBT RATIO OF LOCAL GOVERNMENT UNIT
LAW REGULATION OF CALCULATION OF THE INDIVIDUAL DEBT RATIO OF LOCAL GOVERNMENT UNIT

Summary/Abstract: The aim of the considerations is focused on the analysis of the law regulation of calculation of the individual debt ratio of local government unit. The new rules governing debt limits were introduced in 2014 (Articles 242-244 of the Act on Public Finance, hereinafter referred to as APF) and immediately became a major difficulty in planning and managing local finances in territorial self-government units. The next four years proved many defects and inconveniences in implementing new norms, while “creativity” of the financial sector of local authority units demonstrated that they were quite easy to evade. The structure of the maximum ratio limiting obligations due to titles specified by the lawmaker, due in a particular year, is closely related to the provisions of APF. For the first time it was used in evaluating the budgets passed for 2014. The essence of this legal regulation consists in comparing two ratios, presented in form of an equation (formula). In order to pass the budget local authorities need to obtain a relation in which the left side of the formula (annual debt repayment ratio) is lower than or equal to the right side (maximum debt repayment ratio) (Act of Public Ginance).

• Details
• Contents