Municipal finance and governance in Poland, the Slovak Republic, the Czech Republic, and Hungary

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The recent political and economic transformation in Eastern Europe has led to decentralisation of political structures and increased fiscal autonomy for municipalities. While the self-governing abilities of these municipalities vary by country, many have recently taken on similar public activities and local taxes. However, this fiscal decentralisation has also introduced challenges, particularly regarding the quality of publicly provided goods and services and the coordination of intergovernmental fiscal transfers between central and local governments. Critics point out that many small municipalities in transition economies face financial bottlenecks and struggle to secure essential support from central governments for their economic development. Despite these issues, the trend of fiscal devolution continues alongside ongoing democratisation and decentralisation efforts. This study examines the critical issues related to national fiscal policy and regulatory frameworks affecting local governments' expenditure behavior and their capacity to generate necessary revenues, such as tax income, grants, and municipal borrowings. It highlights the importance of institutional and administrative cooperation with central governments, as well as the challenges posed by underdeveloped financial markets in Poland, the Slovak Republic, the Czech Republic, and Hungary.