Bridges to Nowhere. State Capture and Corruption Risks in Fiscal Transfers and Public Procurement
Bridges to Nowhere. State Capture and Corruption Risks in Fiscal Transfers and Public Procurement

Author(s): Daniela Mineva, Tihomira Kostova, Mihály Fazekas, Viktoriia Poltoratskaia
Subject(s): Fiscal Politics / Budgeting, Corruption - Transparency - Anti-Corruption
Published by: Център за изследване на демокрацията
Keywords: misuse of fiscal transfers; patronage; clientelism; state capture;
Summary/Abstract: This report analyses the risks entailed by the misuse of fiscal transfers from central to local governments in nine SEE countries. Such transfers are typically a tool of equalisation policies seeking to offset disparities in the economic development of territorial units and ensure equitable delivery of public services across the whole country/society. When general rule of law is compromised, however, intergovernmental transfers can be susceptible to corruption risks which can undermine the effectiveness of these transfers and lead to misallocation or diversion of funds. The distortions created by clientelistic transfers are at risk of being further exacerbated by rigged local government procurement. When local purchasing and investment is compromised, the inequity of preferential intergovernmental transfers to local allies of the central government is compounded by the channelling of public money to local business cronies.

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