Romania - Reining in Local Government Spending
Sub-national Governments play an important role in the Romanian public sector. In 2009, sub-national spending was equivalent to 8.5 percent of gross domestic product (GDP). Romania has frequently adjusted its system for financing sub-national gover...
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| Format: | Other Poverty Study |
| Language: | English |
| Published: |
World Bank
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333038_20110218011058 http://hdl.handle.net/10986/2736 |
| Summary: | Sub-national Governments play an
important role in the Romanian public sector. In 2009,
sub-national spending was equivalent to 8.5 percent of gross
domestic product (GDP). Romania has frequently adjusted its
system for financing sub-national government over the last
decade. These changes reflect ongoing Government concerns
over the performance of local governments as well as
attempts to increase the transparency and stability of the
intergovernmental fiscal relationship. The most recent
reform proposals reflect a more immediate concern: the
government deficit. In an effort to meet aggregate targets
for cuts in spending, the Government has been debating
measures to reduce the local wage bill, cut transfers to
local governments, and restrain local arrears. The principal
objective of this technical assistance has been to advise
the Government on the design and implementation of such
efforts, and to suggest directions for longer-term
structural reforms. Romania has a two-tier structure of
local government. The national territory is divided into 41
counties (judets) and the city of Bucharest. These are then
divided into various categories of second-tier local
governments, hereafter referred to as localities. As of
2008, there were 3,179 such jurisdictions, consisting of
2,855 communes, 216 towns, 102 cities, and six Bucharest
districts. Both counties and localities have elected
councils and directly elected mayors/presidents. The budgets
of sub-national governments are dominated by spending on
education. Education accounted for 30 percent of
sub-national expenditure in 2009. But the role of
sub-national governments in education is limited. Localities
act as paymasters for the ministry of education,
distributing teachers' salaries on its behalf. These
payments are financed from earmarked grants. Localities have
no control over staffing numbers or wage levels in the
education sector. They are, however, responsible for
operating and maintaining school buildings, a function which
they finance from discretionary revenues. In much the same
respect, localities act as agents of centrally-financed
social assistance programs, such as the guaranteed minimum income. |
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