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Fiscal Risks of Operations of Enterprises Owned by Large Cities

In: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues

Author

Listed:
  • Marko Primorac

    (University of Zagreb, Faculty of Economics and Business)

  • Kazimir Poljak

Abstract

The paper analyses the financial position of local government units and local government owned enterprises in the Republic of Croatia in order to perceive the main features of their interaction and the financial position of the local sector in the wider context. In response to the growing capital investment needs of local government units, there occurs intensive interaction between local units and local government owned enterprises. This can cause financial instability and materialisation of fiscal risks. Although there are budget constraints, they are not as restrictive as it may seem since the practice shows how the regulation can be played out. Therefore, overall indebtedness of the consolidated local government sector is presented with reference to the revenues from subsidies and grants as forms of support and the granting of guarantees and borrowing consents as potential liabilities. These are all important factors that, if omitted, can result with false impressions and creation of inadequate base for making decisions on the use of financial resources.

Suggested Citation

  • Marko Primorac & Kazimir Poljak, 2018. "Fiscal Risks of Operations of Enterprises Owned by Large Cities," Occasional Publications, in: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues, edition 1, volume 1, chapter 3, pages 41-74, Josip Juraj Strossmayer University of Osijek, Faculty of Economics.
    • Handle: RePEc:osi:chaptr:18-03
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    More about this item

    Keywords

    fiscal risks; local government units; local government owned enterprises; borrowing; subsidies; guarantees;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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