Local government finances

The Ministry of Finance's Department for Municipal Affairs monitors the state of local government finances and assesses the economic prospects of municipalities. The Department is responsible for developing the system of central government transfers to local government, calculating the balancing of central government transfers on the basis of municipal tax revenue, calculating the general transfer to local government, and granting the municipalities the money. Moreover, the Department prepares the proposals on discretionary government grants to municipalities in economic difficulties and submits them to the Government for final approval.

The Department also monitors the ability of the municipalities to meet their funding needs, as stipulated in section 65 of the Local Government Act. The Department has also devised a model for forecasting short-term trends in local government finances, both in individual municipalities and at regional level.

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