Local budgets management in conditions of uncertainty

Abstract

Managing efficiently the public affairs within local communities and strengthening their fiscal resilience while supporting a sustainable growth represents by its nature a continuous challenge for the representatives of local public administration. In addition, it seems that we are living nowadays in an era of uncertainty that leads to a kind of “persistent fiscal insecurity” effect, which is fueling more the intensity of the mentioned challenge, and thus asking for new, adapted and focused strategies of local financial management, able to counteract the negative effects of various turbulences encountered. During recent years, the sustainability of local budgets couldn’t remain unaffected by the new and more than significant challenges, realities and meanings of all areas of social life, which has occurred after the outbreak of the COVID-19 pandemic, and have placed local communities under unyielding fiscal pressures. Starting form this premise, our study is intended to analyze the strategic approach and actual capacity of local financial management across the European Union Member States to boost the principles of good governance (e. g. sound financial management, sustainability and long-term orientation, regulatory quality, responsibility, political stability, competence and capacity etc.) in conditions of uncertainty, in order to consolidate the local expenditures and revenues, and to maintain local deficit and debt within sustainable limits. The reference period is of five years, between 2017 and 2021, aiming to compare the local financial management indicators from the period before the pandemic with the ones after it has occurred and lasted, using data from Eurostat and other databases. The results of our study are of interest and useful for public decision-makers and other specialists, emphasizing some solutions of good practice, by implementing governance principles at the level of local financial management, in order to minimize the negative effects of unforeseen social and economic large-scale turbulences. CZU: 005.915:[351.72:061.1EU]. JEL: H79, I19, I39. DOI: https://doi.org/10.53486/icspm2023.12