Role of EU Funds in Financing the Activity of a Local Government in Poland from 2011 to 2020

Purpose: The aim of the article is to present benefits and consequences of the use of EU funds by a local government in Poland. Design/Methodology/Approach: This paper uses the regulatory analysis method and the statistical descriptive method. This article is the result of a broad research conducted in Poland in 2020. Findings: Based on the results of empirical research, the article shows that one of the sources of financing a developmental activity of a local government are EU funds. Poland benefitted from these sources even before the pre-accession period, but the wide access to EU money occurred after 2004 when Poland joined the European Union. Then, it was possible to reach EU funds at the much larger scale to finance and co-finance programmes and projects aiming at the reduction of disparities between individual states and regions of the European Union. Practical Implications: Poland’s accession into the European Union enabled the local government units to obtain financial resources for the developmental activity. The LGU obtained access to non-repayable sources of financing the EU programmes and projects. However, obtaining these resources requires incurring own expenditures i.e., co-financing the EU projects. In the meantime, the surpluses of the current incomes over the current expenditures are not able to secure the own contribution of the LGU. Thus, the local government generally has two options; it should either resign from applying for the EU funds or secure the contribution with their own external financial sources i.e., credits, loans, or issuance of securities. The latter solution relates to indebtedness of the local government. Originality/Value: Considering that the inflow of the funds from the budget of the European Union is an extremely important and cheap source of financing development (which is likely to be limited for Poland in next perspectives), it seems that systematic targeted subsidies for investment should be planned in the state budget or low-interest loans for investments, for the LGU, securing them their own contribution.