Fiscal (Un)Sustainability in Practice: Local Government Finance in Visegrad Economies

Tomasz Uryszek; Agnieszka Kłysik-Uryszek

doi:10.18778/1508-2008.28.18

Authors

Tomasz Uryszek University of Lodz, Faculty of Economics and Sociology, Institute of Economics https://orcid.org/0000-0003-4892-3747
Agnieszka Kłysik-Uryszek University of Lodz, Faculty of Economics and Sociology, Institute of Economics https://orcid.org/0000-0001-6876-8751

DOI:

https://doi.org/10.18778/1508-2008.28.18

Keywords:

fiscal sustainability, Visegrad economies, local government, public debt, budget deficit, Ponzi games

Abstract

The objective of this study is to evaluate the fiscal sustainability of Local Government Units (LGUs) in the Visegrad Group economies (Czechia, Hungary, Poland, and Slovakia; the V4), focusing on three key hypotheses: (1) LGUs in the V4 are involved in so-called Ponzi games; (2) the adverse effects of such games intensified during the economic recession, the COVID-19 crisis, and the war in Ukraine; (3) primary budget balances of LGUs impact the stabilization of their debt levels. The study spans 2001–2022, encompassing significant economic disruptions. The analysis utilizes fiscal sustainability assessments, including the primary gap indicator and criteria for Ponzi-like behaviors. Key findings reveal varying degrees of fiscal sustainability across the V4, with notable disparities in resilience and debt management. The implications and recommendations emphasize the need for enhanced fiscal discipline, targeted policy adjustments, and transparent governance frameworks to address identified vulnerabilities. The paper offers a comprehensive examination of LGU fiscal sustainability in Central European economies, offering insights for policymakers and enriching the discourse on public finance management in post-transitional economies.

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