Guidelines on Local Government Borrowing and Recent Developments in South East Europe
4. Local Government's Creditworthiness Assessment

 

4.5 Local Government Debt Statistics in South East Europe

Total Local Government Borrowing as a Percentage of the Capital Expenditures

Debt financing of capital expenditures varies across local governments from different territories covered by NALAS members. (Figure 1). For example, in Montenegro debt financed 80% of local governments' capital expenditures, while in Moldova only 10% (2008). On average, between 2006 and 2009 debt has financed around 37% of local governments' capital expenditures from all Territories covered by NALAS members., excluding Turkey. The share of debt in the overall financing sources of capital expenditures presents large deviations from one year to another in almost all of the analyzed countries.

Figure 1: Local government borrowing as percentage of capital expenditures

Total Local Government Borrowing as a Percentage of the Capital Expenditures


Source: Calculation based on the questionnaires answered by local experts

Outstanding Local Government Debt as a Percentage of GDP n all Territories covered by NALAS members, local credit markets are still in their infancy. In most of the analyzed territories covered by NALAS members (Albania, Bulgaria, Croatia, Macedonia, Moldova), local debt accounts for less than 0.5% of GDP and less than 5% of local governments total expenditures. In Serbia and Turkey the dynamics of local debt has been in line with economic growth, resulting in relatively stable debt ratios during the past years (Figure 2).

Figure 2 : Outstanding debt as percentage of GDP
Outstanding LG Debt as a Percentage of National GDP


Source: Calculation based on the questionnaires answered by local experts

Total Local Government Debt as a Percentage of the Local Government Revenues

Local governments' indebtedness varies across analyzed countries. In Croatia, Macedonia, Moldova and Romania local debt represents less than 5% of local governments' total revenues. Slovenia, Serbia and Montenegro have an indebtedness level ranging between 20-30%. Turkey stands out as the country with the highest indebtedness level (75% in 2008).

Figure 3: Total Local Government Debt as a Percentage of the Local Government Revenues
Total Local Government Debt as a Percentage of the Total Local Government Revenues (national level)

... Source: Calculation based on the questionnaires answered by local experts

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