The Government has approved a proposal of the Ministry of Finance stipulating a better and efficient monitoring of municipal economic management at its session on 3 October. Based on 18 various types of socio-economic indicators (total credits, regular liquidity, total assets, number of citizens), the system should provide an analysis of current economic state of Czech municipalities. The analyses should be conducted by the Ministry of Finance by using financial and social figures depicting the situation and the financial state of a municipality. Municipalities with higher rate of indebtedness (25 per cent of all assets) and liquidity problems shall be contacted by the Ministry of Finance to provide an explanation of the current financial state. Further, the Ministry may consult any possible remedies with the local government.
Except for the direct impact on the financial situation of each respective municipality, the Government is to be informed as the figures of indebtedness depict the financial situation of public budgets. Therefore, the aim of the proposal is to increase a central governmental control of financial management of municipalities to a higher extent. In fact, it could be possibly seen as state intervening in local government autonomy as municipalities have their own control mechanism (a control committee has to be set up by each local government). As a consequence of the system, the Government intends to promote financial stability at the municipal level too.
For further information regarding the system, a computation procedure and indicators, click here (Ministry of Finance sites).
5th March 2019