Budgeting and Accounting Practices for Subsovereign Debt Issuers
Economies emerging from central planning, such as Poland, still suffer from a statist orientation in their local governments. The fundamental characteristics of financial reporting involve municipal responsibility to communicate and to be accountable to central ministries or other authorities which often continue to provide large measures of the budgetary resources available to municipal governments. Financial reporting focuses on expenditure management, or ensuring that budgeted resources — over 60 percent of them obtained from the central government — are expended for eligible purposes in keeping with the budget, and on minimizing deficits. There are few gains to be obtained from generating operating surpluses, as these — in the case of Poland — cannot be held in reserve for future expenditures or assigned to particular projects for which they were not budgeted. Instead, a budgetary surplus is carried over to the next year to finance what may otherwise be a deficit, or for whatever purpose the municipal board and council decide.
KeywordsLocal Government Cash Flow Central Government Debt Service Fixed Asset
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