Sub-national Finances and Fiscal Consolidation: Walking on Thin Ice
Recent crises and national consolidation packages affected sub-national finances. In many OECD countries, central governments introduced reductions in transfers to sub-national governments, and established expenditure and/or deficit objectives to be met by local or regional authorities. Such measures have reduced the financial room of sub-national governments for implementing key public services or investments. In parallel, borrowing conditions deteriorated for many sub-national governments, as banks and financial markets became increasingly reluctant to lend. Since late 2008, financial markets started discriminating between high- and low-quality SNG bonds, and yields reached record-high levels for sub-national governments perceived as less creditworthy. Facing degraded finances, upward pressure on expenditures and deteriorated borrowing conditions, many sub-national governments have used public investment as an adjustment variable to reduce their budget deficits and preserve their spending on welfare, health or education. However, such policies may hinder long-term growth perspectives.
|Date of creation:||11 Mar 2013|
|Contact details of provider:|| Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16|
Phone: 33-(0)-1-45 24 82 00
Web page: http://www.oecd.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:oec:govaab:2013/2-en. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.