OECD Regional Development Working Papers
- Discontinué
- Suivi de:
- OECD Regional Development Papers
- ISSN : 20737009 (en ligne)
- https://doi.org/10.1787/20737009
Sub-national Finances and Fiscal Consolidation
Walking on Thin Ice
In parallel, borrowing conditions deteriorated for many sub-national governments, as banks and financial markets became increasingly reluctant to lend. Since late 2008, financial markets started discriminating between high- and low-quality SNG bonds, and yields reached record-high levels for sub-national governments perceived as less creditworthy.
Facing degraded finances, upward pressure on expenditures and deteriorated borrowing conditions, many sub-national governments have used public investment as an adjustment variable to reduce their budget deficits and preserve their spending on welfare, health or education. However, such policies may hinder long-term growth perspectives.
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