Title: Impact of financial and debt crisis on local and regional authorities.
1Impact of financial and debt crisis on local and
regional authorities.
- Frank Lierman, Chief Economist Belfius Bank
- ECOS, Committee of the Regions
- Brussels , April 26, 2012
2Impact of financial and debt crisis on local and
regional authorities
- The financial and debt crisis.
- Investments in danger.
- How to restore the self-financing capacities ?
- Limited financing capabilities of banks.
- Alternatives for financing public facilities.
3The financial and debt crisis.
- Financial, economic, social, public finance
sovereign debt
4The financial and debt crisis.
- Subnational revenues has been affected by the
economic and public finance crisis.
Subnational revenue in the EU27 from 2000 to 2010
Subnational revenue by category in 2010 ( of
total revenue)
4
5The financial and debt crisis.
- Subnational expenditure a global cost control
combined whit higher level of social costs.
Subnational expenditure in the EU27 from 2000 to
2011
Subnational expenditure by category in 2010 ( of
total expenditure)
5
6The financial and debt crisis.
- Budget balance in danger.
Public budget balance in EU27 from 2000 to 2010
( of GDP)
Subnational public budget balance in the EU27
from 2000 to 2010 ( of GDP)
6
7The financial and debt crisis.
- Public debt increased sharply.
- Public debt by sector in the EU27 from 2000 tot
2010 - change
7
8The financial and debt crisis.
- Public debt increased sharply. (2)
- Public debt by sector in the EU27 from 2000 tot
2010 - of GDP
8
9Impact of financial and debt crisis on local and
regional authorities
- The financial and debt crisis.
- Investments in danger.
- How to restore the self-financing capacities ?
- Limited financing capabilities of banks.
- Alternatives for financing public facilities.
9
10Investments in danger.
- Austerity plans are not neutral.
- A freezing or a reduction in central government
transfers. - Stricter rules for borrowing.
- Spending restrictions.
- Reduced capacity to increase the tax burden
10
11Investments in danger.
- Employer, service provider, economic agent,
investor and national solidarity player - Expenditure 17 of GDP and 34 of public
spending - Direct investment 65 of public sector
Subnational expenditure by economic function in
the EU27 ( of total expenditure)
11
12Investments in danger.
- But essential services/investments cannot be
reduced.
- Replacement investments for renewing existing
infrastructure and equipment (68 of all
investments in EU) - Catch-up investments responding to demand/needs
for - public infrastructure
- renovation of buildings
- innovation in transport
- deployment of new technologies
- More cyclical or one-off needs
- local elections
- 2007 2013 Structural Funds envelopes
- special events cultural, sports, natural
catastrophes, - Major longer term issues
- ageing
- sustainable environnement
- Traditional counter-cyclical role
12
13Impact of financial and debt crisis on local and
regional authorities
- The financial and debt crisis.
- Investments in danger.
- How to restore the self-financing capacities ?
- Limited financing capabilities of banks.
- Alternatives for financing public facilities.
13
9/30/2014
14How to restore the self-financing capacities ?
- Structure of revenues and expenditures in EU27 in
2010.
(in of total)
14
15How to restore the self-financing capacities ?
- Actions which can be undertaken.
- Revenues
- maintaining or enlarging tax revenues
- boosting tariffs and fees
- optimising assets revenues
- optimising grants and subsidies captation
- Expenditures
- reducing staff costs
- better control on financial costs
- improving control on social spending costs
- reinforced cost control on purchases
- implementing investment policies
15
16How to restore the self-financing capacities ?
- The assets and liabilities composition as of
December 2010 in EU27.
(in bn euro)
Net financial liabilities - 278 bn
16
17Impact of financial and debt crisis on local and
regional authorities
- The financial and debt crisis.
- Investments in danger.
- How to restore the self-financing capacities ?
- Limited financing capabilities of banks.
- Alternatives for financing public facilities.
17
18Limited financing capabilities of banks.
- Reduction of number of actors
- Withdrawal of foreign banks
- Increase of margins
- Constraints of Basel III ? less volumes, more
expensive - Danger of credit crunch
18
19Impact of financial and debt crisis on local and
regional authorities
- The financial and debt crisis.
- Investments in danger.
- How to restore the self-financing capacities ?
- Limited financing capabilities of banks.
- Alternatives for financing public facilities.
19
20Alternatives for financing public facilities
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21Alternatives for financing public facilities
- Products and clients diversification in order to
maintain funding capacities.
21