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Financing local development in the Polish emerging markets BISE’s experience. Włodzimierz Grudziński Washington, October 2004. Local government structure. 3 levels of local government ( established in ): number of entities Gmina ( 1990 ) Powiat ( 1999 )

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financing local development in the polish emerging markets bise s experience

Financing local development in the Polish emerging markets BISE’s experience

Włodzimierz Grudziński

Washington, October 2004

local government structure
Local government structure
  • 3 levels of local government (established in):

number of entities

    • Gmina (1990)
    • Powiat (1999)
    • Województwo (1999)
  • Structure of gminas

by number of population:

  • Structure of powiat

by number of population:

financial model of local government
Financial model of local government

Characteristics of local government’s entities

  • Non bancrupting entities
  • Stable sources of the own revenue (taxes, fees, revenue from property)
  • Debts limits are as follows:
    • Costs of debt servicing =< 15% of the planned budget’s revenue (Y)
    • Amount of debt =< 60% of the realised revenue (at the end of the year)
    • Amount of debt =< 60% of the planned revenue per year (at the end of the quarter)
    • Total public debt (state and local) < 60% of the gross domestic product
  • Financial supervision by the regional auditing chambers (RIO):
    • Legal conformity supervision of the financial resolutions
    • Obligatory opinions of RIO concerning incurring debt
sources of local governments investments
Sources of local governments’ investments
  • Own revenue
  • Debt
    • Credits
    • Bonds
  • Allocations, subventions, grants
    • UE funds

(regional development, transport, cross-border cooperation)

    • National Funds

(environmental protection (NFOŚ), multipurposes (BGK))

  • Third party agreements
    • Public-private partnership
    • Energy saving companies
soft funds for local government entities
Soft funds for local government entities

*important part of the program is dedicated to state infrastructure (highways)

bise s experience in financing of local projects 1990 2004
BISE’s experience in financing of local projects (1990-2004)
  • Over 1100 financed projects ( 700 financed entities, 25% of BISE portofolio),
  • Longterm cooperation with :
    • World Bank - Bank of Council of Europe (CEB)
    • NIB - Polish national funds (NFOŚ, BGK)
  • Proven metodology of credit analysis oriented at every level of local government (ratio of default – 0,03%)
  • innovating solutions adapted to emerging needs and rapid changes on the local government’s market:
    • Quazi-currency credit with swap - Long term loans
    • Bridge-loans for UE funds - Municipal bonds
    • Special procedures for tenders concerning the environmental projects
    • Products tailored to emerging activities of local governments (e.i.ZOZ)
future of local governments financial market emerging needs
Future of local governments’ financial market- emerging needs
  • Long-term financing (>25 years):
    • Positive impact on reducing indebtness
    • Supplementary to the medium term UE funds
    • Solution for the self-financing local investments
  • Subordinated loans for special purpose companies
  • Development of public-private partnership projects
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