An Ability of Communes to Incur Debts over the Years 2007-2017 Based on Lower Silesian Province

Agnieszka Werwińska

Abstract

Aim: This paper aims to establish whether and to what extent new rules have changed possibilities of incurring a debt by communes since 2014 as well as what changes occurred in the level of their debts over the three years preceding the introduction of the individual debt ratio. As far as its subject is concerned, it aims to compare the influence of new solutions on local government units in the area of Lower Silesian province in cumulative terms. Design / Research methods: The aim has been attained by comparing the level of debt to be incurred by communes pursuant to the new regulations as well as to the previously binding fifteen-percent limit of a debt service. The analyses were carried out for years 2007-2017. Statistical methods and a ratio analysis were applied. Conclusions / findings: The IDR formally limited an ability of local government units to incur liabilities. However new solutions (in cumulative terms) did not decrease the scale of making use of debts. The application of IDR also diminished the capacity of communes to incur debts however the limitation was of formal nature. Originality / value of the article: The subject of the paper falls within the topic of publications concerning the necessity of applying debt limits, changes made previously and current solutions as well as the impact of the IDR on financial management of local government units. This publication is original in terms of analyzing the influence of the IDR on local government units and communes in the area of Lower Silesian province. Implications of the research (if applicable): The paper constitutes a contribution to the discussion on limitations of the IDR as well as the necessity of changing a present debt limit of local government units. Limitations of the research (if applicable): The results of analyses and formulated conclusions do not constitute an evaluation of creditworthiness of particular communes. They depict their situation in cumulative terms and reveal consequences of the IDR in the form of a quota not showing other consequences (application of alternative financing methods). The research may be continued by analyzing the impact of IDR on particular types of communes and individual commune. They may concern the character and the scale of other consequences of the IDR.
Author Agnieszka Werwińska (ES / DF)
Agnieszka Werwińska,,
- Department of Finance
Journal seriesCentral and Eastern European Journal of Management and Economics, ISSN , e-ISSN 2353-9119, (B 8 pkt)
Issue year2018
Vol6
No4
Pages23-34
Publication size in sheets0.55
Keywords in EnglishIndividual debt ratio of communes, Creditworthiness of communes, Liabilities of communes
DOIDOI:10.29015/ceejme.770
URL http://ceejme.eu/wp-content/uploads/2019/01/ceejme_4_8_art_02.pdf
Languageen angielski
Score (nominal)8
ScoreMinisterial score = 8.0, 05-03-2019, ArticleFromJournal
Ministerial score (2013-2016) = 8.0, 05-03-2019, ArticleFromJournal
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