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Local government borrowing practice in Croatia

Author

Listed:
  • Anto Bajo

    (Institute of Public Finance, Zagreb)

  • Marko Primorac

    (Faculty of Economics and Business, Zagreb)

Abstract

The purpose of this paper is to analyze local government units’ borrowing in Croatia. Throughout the paper, we present the financial positions of local government units according to the size and structure of their gross and net debts, analyze borrowing conditions with commercial banks and the state development bank and discuss potential opportunities for and constraints on the issue of municipal bonds. Croatian local government units are not overindebted but do use guarantees to avoid central government borrowing restrictions. Sources of potential financial instability and risks to the creditworthiness of local government units can be found in the financial operations of utility companies. Inaugurating a credit rating system would improve control of adherence to budgetary constraints and determination of priorities for approving local government units’ borrowing.

Suggested Citation

  • Anto Bajo & Marko Primorac, 2010. "Local government borrowing practice in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 34(4), pages 379-406.
  • Handle: RePEc:ipf:finteo:v:34:y:2010:i:4:p:379-406
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