Municipal Debt and Its Economic Effects – The Romanian Case

The paper analyzes the municipal debt of Romanian subnational governments and its effects on the economic development of local communities, especially focusing on the particularities of local indebtedness in the context of the recent economic and financial crisis. By combining qualitative and quantitative analysis (based on indicators of the level, structure and dynamics of local debt) we seek to identify the sources of malfunction or inconsistencies in public policy making and further provide alternative solutions to eliminate them. Taking into account the particularities of the socio-economic environment and the current socio-political realities of Romania, as a European Union Member State, our assessments are carried out by reference to the developments in the municipal indebtedness of other European countries, developed but also developing ones. The quantitative analysis is based on both national and European regulations and incident databases of national authorities and Eurostat.