Expert-Grup

Financial Autonomy in the Republic of Moldova: The Evolution of Local Budget Revenues

Sectorul financiarFriday, 12 July 201910003 views

Automatically translated summary. The full text is available in Romanian.

An analysis of local budget revenues in the Republic of Moldova over 2014-2018 shows that the state budget concentrates over 62% of the country's budget resources and that local authorities depend heavily on transfers from it. The article compares Gagauzia, districts, Chișinău and Bălți, and first- and second-level local authorities.

Over 70% of local budget revenues in 2017-2018 came from state budget transfers, a dependence that has grown since the 2013 local public finance reform. Gagauzia benefits from a more advantageous system: its total revenue per capita reached MDL 5,497.4 in 2018, and it has outpaced Chișinău since 2017. Districts performed worst, with average revenues at 98.3% of their 2014 level in real terms.

Own-source revenues account for about 10.9% of consolidated local budget revenues and contributed only 2.3 p.p. to the 20.5% growth in 2016-2018. The share of revenues over which local authorities have full decision-making power fell from 42% to 39.3%, as earmarked transfers exceeded 50% of revenues in all groups of second-level units. Apart from Chișinău, second-level authorities act more like deconcentrated services of central government than genuine local authorities.