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Author(s): Florin OPREA | rina BILAN

Journal: Scientific Annals of the Alexandru Ioan Cuza University of Iasi : Economic Sciences Series
ISSN 0379-7864

Volume: 2011;
Issue: LVIII;
Start page: 157;
Date: 2011;
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Keywords: local governments | local indebtedness | debt sources | local development

Financing local activities at an appropriate level by reference to local communities’ development needs cannot be left, especially where these needs are major, solely to the account of ordinary resources, but loan resources must complete them. However, the existence of a legal framework allowing for local governments to borrow and the fulfillment of the legal requirements do not guarantee that local communities will make use of loans to raise additional resources and finance their development needs, as a number of factors interfere. On this basis, we intend to analyze Romanian local governments’ indebtedness as well as the particular forms that it takes, both at macroeconomic level, aiming to assess the overall debt of all Romanian local governments and from a territorial perspective, aiming to highlight the discrepancies in promoting local indebtedness for various types of local communities. Our approach combines the quantitative analysis, based on processed data from the Ministry of Public Finance, with the analysis of the involved qualitative issues. Our main conclusion is that until now the local indebtedness potential has not been exploited enough to make its contribution to the financing of local investments and the development of local communities, the main driving factors being the low involvement of local governments, the limited local economic base and financial potential, the fluctuating and perfectible legal framework but also the national and international social and economic conditions.
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