How to Manage Subnational Government Fiscal Risks

How to Manage Subnational Government Fiscal Risks

Author/Editor:

Sandeep Saxena



Publication date:

September 1, 2022

Electronic access:

Free download. Use the free Adobe Acrobat Reader software to view this PDF file




Summary:

Subnational governments can create considerable fiscal risks for central governments. In addition to impacting service delivery at the local level, unsustainable subnational finances can be a continued drain on central resources. The need to strengthen public financial management systems and risk analysis and management capacities at the subnational government level cannot be overemphasized. Central governments need to develop strong institutional mechanisms to systematically monitor the health of subnational finances in order to be able to proactively manage the associated risks. This practical guide provides a framework for central governments seeking to assess and manage fiscal risks arising from weak subnational finances. It analyzes the sources of subnational financial vulnerabilities and argues that central governments would benefit from putting in place the following: (1) a stronger regulatory framework, (2) improved fiscal reporting, and (3) stronger central oversight. Lessons learned from international experience are particularly useful for developing economies where risk management can be improved.


Series:

Practice Note No 2022/003


Matter:





Frequency:

casual


English

Publication date:

September 1, 2022

ISBN/ISSN:

9798400216831/2522-7912

Stock number:

HTNEA2022003

Pages:

29


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