Reasons and capabilities to run up to a local and regional government debt

Abstract

An increasing range of tasks carried out by the local government, in conjunction with insufficient own revenue, limited access to transfer sources increases the demand for funds from non-budgetary
sources, including loans and credits. Their attractiveness, especially in the context of the multiannual financing of investment projects, creates opportunities to improve local infrastructure, to accelerate
local development, but at the same time generates a risk of deterioration of the financial situation, and as a result, the socio-economic situation in the event of exceeding the limits of a local finance debt. The purpose of this article is to identify the essential rationale of the indebtedness of local government units, but also economic, organizational, and, most importantly, legal restrictions.