Abstract
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Abstract:
Local and regional authorities play a key role in the implementation, maintenance and rehabilitation of public infrastructure. In OECD countries, local and regional investment represents 3.1 % of GDP and 59 % of total public investment while in the EU the corresponding figures stand at 1.4 % of GDP and 55 % of public investment, respectively.
A different picture emerges in the countries in South East Europe (Albania Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Moldova, Montenegro, Romania, Serbia, Slovenia and Turkey). In this group, local and regional investment has a share of 1.2 % of GDP and a mere 35.5 % of total public investment. At the same time, local authorities are responsible for covering significant investment needs, stemming from an array of historical specificities of the region and creating a need for spending on transport infrastructure, in the energy and road sectors, etc.
The goal of this report is to look at the investment capability of local authorities in Bulgaria and Macedonia as representative SEE countries. The analysis covers the change in capital spending over the period 2013-2017 and the share of local investment spending in public investment and GDP. The study looks at the main sources of financing and the change in investment capacity at local level.
On the basis of a historical review of the trends in sources of funding and capital expenditure (own sources, capital transfers from the central government, loans, municipality bonds), legislation currently in force and public sector trends, the author examines and assesses the possibilities for expanding and diversifying the sources of funding of local investment. The possibilities to introduce new local taxes and alternative sources of capital expenditure financing, such as debt financing, intermunicipal cooperation, PPP, etc. are also analysed.
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