Indicators for the

assessment the financial

situation of local
government
Autonomy of local government
• is a phenomenon very complex and
affects all aspects of its performers .

• the question this independence can be

accounted for in a manner multifaceted:
in terms of legal, financial, political,
organizational.
Definitions
• Economical Autonomy – is part of income in total
income of local government and thus reflects how
much of the potential expenditure can be financed
from local sources

• The financial autonomy – adjustment of its income

to expenditure, which must be held in connection with
the performance of their tasks and powers to their
shape-is a necessary condition for the implementation
of the tasks arising from the above regulations.
Indicators for the assessment the
financial situation of local
government
 are used to assess the financial situation of the local
government and the ability to bind, or deciding on the nature of
the development.

 local government - the specific types and categories, can

compare their financial situation with the financial situation of
the other units.

 Types of indictors:
 Liquidity indicator
 Indicators of attractiveness
 Indicators of financial independence
 Indicators per capita

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Financial analysis
 a comparison in time, which allows you to specify
the direction and dynamics of development of the
given entity,
 compare with the plan and the budget, that is, the
actual data reference to planned
 comparison based on standard systems, allowing
a comparison of the actual state of the accepted
patterns,
 comparisons with other units.
Dylewski M., Filipiak B., Gorzałczyńska-Koczkodaj M., Podstawy analizy finansowej w jednostkach samorządu terytorialnego,
Fundacja na rzecz Uniwersytetu Szczecińskiego, Szczecin 2003, s. 43
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Types of indicators
The type The construction of the indicator
Liquidity indicator
Basic liquidity ratio income / (expenditure + liabilities)
(CR)

Indicators of financial independence

Income ratio of own income / total income
financial
independence

Expense ratio of the expenses of the local government unit,

financial which has complete freedom to dispose
independence of/total income

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Types of indicators
Indicators of attractiveness
Operating (current income-current expenses)/income
development capacity current
indicator
Total capacity for (current income-current expenditure +
development property income)/total income
indicator
Debt indicators
Total debt ratio total liabilities/total income
Debt ratio repayments of debt/total income

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Types of indicators
Indicators per capita

grants and subsidies grants and subsidies / number of

per capita inhabitancies
Own income per own income / number of inhabitancies
capita
Total liabilities per Total liabilities / number of inhabitancies
capita

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Case study
 On the base of data of your selected country
try to calculate above indicators and evaluate
financial situation of local governments in
your country for two selected years.

 Data sources: Country website or OECD

Reports or Dexia Reports
 please send calculations to my e-mail
until Friday 21.02.2022
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