The project Municipal debt restructuring: design a tool for the evaluation of the long run sustainability of LG’s financial structure is carried out by SOSE in collaboration with the Office of Lithuanian Prime Minister and aims to define and implement tools estimating the sustainability of local governments’ financial structure.
The main goal of the project is the determination of the fiscal gap between standard expenditure and fiscal capacity of local governments. As regards expenditure, the analysis compares the costs incurred and the standard costs of the services provided considering the level of local demand for services in the long run. As regards resources, the study analyses the fiscal capacity of local governments, defining potential revenues and the potential additional revenues that could contribute to increase financial resources, including also private financial resources.
The results and the analysis tools elaborated in collaboration with SOSE, will support the Lithuanian Government in implementation of the reforms aiming
- to increase the efficiency in the provision of local public services;
- to reach the sustainability of local governments’ financial structure in the long run;
- to improve the investment capacity of local governments.
The first phase of the project focused on the analysis of data useful to calculate standard expenditure needs in the period 2013-2017 for all 60 Lithuanian municipalities. Then standard expenditure needs will be calculated through panel regression econometric techniques estimating service levels in order to analyse local governments’ performances as regards expenditure and services provided and to evaluate fiscal capacity and fiscal gap. The project will be concluded with the study of the infrastructural gap.