MODERNIZATION OF MANAGEMENT OF MUNICIPAL BORROWING IN THE CONTEXT OF FINANCIAL DECENTRALIZATION

Abstract

An exciting paradigm shift is emerging in developing and transitional economies. With increased decentralization and urbanization, local governments have taken on greater responsibility in the provision of basic municipal services. To help fund education, solid waste management, water and sanitation, and other economic development projects, municipalities have turned to innovative financing mechanisms to meet local demand. Since central government support cannot finance the service needs of most municipalities, local governments are increasingly turning to: own-source revenues such as taxes, licenses and permits, user fees for services, and municipal assets; and borrowing from private capital markets.