Municipalities and the Solution of Expenditure in the Public Interest and Indebtedness

Abstract

Municipalities as basic territorial self-governing units and regions as higher territorial self-governing units are considered to be the territorial self-governing units in the Czech Republic. They are public corporations which may have their own assets and manage according to their own budget. They are a part of the public sector and therefore they cannot be excluded from the budget management rules, including debt issues. An important fact is that they also receive funds collected from the central government, but their management is not burdened with the financing of mandatory expenditures to the extent it is with the state. Introducing the fiscal rules related to indebtedness is for ensuring budgetary discipline, to reduce the long-term deficit management financed from foreign resources and to strengthen co-responsibility for the development of public finances. The public interest and the level of indebtedness have an important role in deciding on the granting of state subsidies, which can take different forms.