SNDP - An Integrated Approach for Subnational Modernization

1
SNDP - An Integrated Approach for Subnational
Modernization

• CoherentPolicy Oriented Fiscal - Local mgt -
  Finance Policy
• Complex
  Settlements - Micro R- EU Regions
• Partnership CG - LG -
  PPP - NGOs
• Medium-Term Moderniz Addressing the Systemic
  Issues
• Bottom-up Approach The Merits of FD
  are Profound
• Coordination for Spillover WB - USAID -UI -
  KHF - CUI
• Muddle-through or Coherent Modernization

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Hungary - Subnational ModernizationSubnational
System at the EU Accession

• Multi-layer LG System Elected RG, SD
  by CG, Reg, Mun.
• 
  Nordic vs. Southern European M system
• Less Central More Local Tx VBPTx, Vehicle tx,
  Less Transfer
• Entrepreneurial Ms defined in 1990
  -gt earmarked vs. block grant
• EU Funds for Regions Euro 1-2bn.
  Per Annum
• Public Investment Finance PPP FDI LG
  Borrowing
• There is No Sufficient Progress Towards the EU!

3
Hungary - Subnational ModernizationMid-term
Challenges

• Functional Regionalism The way towards a
  Multi-layer LGS?
• 
  Vs. Special Purpose Districts?
• Tax Reform Fiscal Dec-Tx
  Admin -Local Polit. Challenges
• EU Structural Funds Reforming the Grant
  System
• Public Investments Restructuring of P.
  I. F. System
• Maintaining CA and Fiscal STABILITY

4
Hungary - Subnational ModernizationCross-Sectoral
Challenges

• The system of 3200 M is not sustainable.
  Municipalities and the SN challenges are not
  taken into account in sector programs which may
  be strategically suboptimal and not support,
  rather bypass each other.
• The present SN system is not prepared to absorb
  EU funds, and the 97/99 progress was negligible.
  Three quarters of Municipalities alone will never
  be able to comply with EU fund conditions.
• Municipal privatization local private sector
  development may be more complex than those were
  in the manufacturing industries plus there are
  serious negative externalities.
• The Bank has not taken into account the
  municipal enterprise sector (Es with M ownership
  stake)
• To respond SN challenges, the systemic issues in
  municipal borrowings should be properly addressed.

5
Hungary - Subnational ModernizationNext Steps

• EU structural funds fiscal, local capacity,
  finance implications
• A medium term Tax reform EU compliance SN
  Fiscal challenges EU structural funds fiscal,
  local capacity, finance implication
• Develop Local Capacity in monitoring
  regulating SD
• Strategic planning, Budgeting establishing
  financial control over LGs
• Introducing 21st Century financing instruments
  in the M sector
• Enhancing the prudential framework for M finance