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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


* 92,8% of entities are indebted


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 BISE is 4mln USD - 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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