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Role of EU Funds in Financing the Activity of a Local Government in Poland from 2011 to 2020

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  • Krzysztof Surowka

Abstract

Purpose: The aim of the article is to present benefits and consequences of the use of EU funds by a local government in Poland. Design/Methodology/Approach: This paper uses the regulatory analysis method and the statistical descriptive method. This article is the result of a broad research conducted in Poland in 2020. Findings: Based on the results of empirical research, the article shows that one of the sources of financing a developmental activity of a local government are EU funds. Poland benefitted from these sources even before the pre-accession period, but the wide access to EU money occurred after 2004 when Poland joined the European Union. Then, it was possible to reach EU funds at the much larger scale to finance and co-finance programmes and projects aiming at the reduction of disparities between individual states and regions of the European Union. Practical Implications: Poland’s accession into the European Union enabled the local government units to obtain financial resources for the developmental activity. The LGU obtained access to non-repayable sources of financing the EU programmes and projects. However, obtaining these resources requires incurring own expenditures i.e., co-financing the EU projects. In the meantime, the surpluses of the current incomes over the current expenditures are not able to secure the own contribution of the LGU. Thus, the local government generally has two options; it should either resign from applying for the EU funds or secure the contribution with their own external financial sources i.e., credits, loans, or issuance of securities. The latter solution relates to indebtedness of the local government. Originality/Value: Considering that the inflow of the funds from the budget of the European Union is an extremely important and cheap source of financing development (which is likely to be limited for Poland in next perspectives), it seems that systematic targeted subsidies for investment should be planned in the state budget or low-interest loans for investments, for the LGU, securing them their own contribution.

Suggested Citation

  • Krzysztof Surowka, 2021. "Role of EU Funds in Financing the Activity of a Local Government in Poland from 2011 to 2020," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 1096-1109.
  • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:special1:p:1096-1109
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    References listed on IDEAS

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    1. Dionisio Buendía-Carrillo & Juan Lara-Rubio & Andrés Navarro-Galera & María Elena Gómez-Miranda, 2020. "The impact of population size on the risk of local government default," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1264-1286, October.
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    4. Jungin Kim, 2018. "Collaborative leadership and financial sustainability in local government," Local Government Studies, Taylor & Francis Journals, vol. 44(6), pages 874-893, November.
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    More about this item

    Keywords

    Local government unit (LGU); EU funds; revenues; expenditures; Poland.;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other

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