Local Governments and the Financial Crisis : An Analysis

The financial and economic crisis that started in the United States has finally impacted all urban communities and investment financing systems around the world. Local governments grappling with the crisis face a number of constraints which, though disparate in nature, have a cumulative effect. This phenomenon has created a number of extremely difficult situations. In general terms, the consequences of the crisis can be felt on four levels: 1) revenue-either generated by local governments or derived from State transfers-which may be subject to sharp declines; 2) expenditures, which are rising because of the slowdown in economic activity and the corresponding increases in unemployment and social welfare needs; 3) financing capacities, which are shrinking owing to the difficulty in obtaining loans and the increase in the cost of money; and 4) foreign investment, which has declined; operations underway, which have been put on hold in many instances; and projects, which have either been cancelled or delayed. The two major financing systems bond issues and banks whether specialized or not, have been heavily impacted. Governments have adopted different measures depending on political and institutional environment. The situation differs greatly from one country to another. In some institutional contexts, local governments are relatively sheltered while in others, they are exposed. In terms of assets, local governments that can invest their funds in the market have been directly affected by losses in capital. The deterioration in local government accounts is often one of the factors constraining the ability of these governments to borrow.

Bibliographic Details

Main Author:	Paulais, Thierry
Format:	City Development Strategy (CDS) biblioteca
Language:	English en_US
Published:	Cities Alliance, Washington, DC 2009-12
Subjects:	ACCESS TO HOMEOWNERSHIP, ADVISORY SERVICES, ASSETS, AUTONOMOUS REGIONS, BAD BANK, BAILOUT, BALANCED BUDGETS, BANK LOANS, BANKING INSTITUTIONS, BANKING SYSTEM, BANKRUPTCY, BID, BOND, BOND INSURANCE, BOND ISSUE, BOND ISSUES, BORROWER, BORROWING, BORROWINGS, BUDGET SURPLUSES, CAPITAL INVESTMENT, CAPTIVE MARKET, CITIES, COMMERCIAL TRANSACTIONS, CONFLICTS OF INTEREST, CONSUMER CREDIT, CREDIT ENHANCEMENT, CREDIT LINE, CREDIT-RATING AGENCIES, DEBT, DEBT RESTRUCTURING, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DEVELOPMENT BANKS, DONOR SUPPORT, DOWN PAYMENT, DOWN PAYMENTS, DURABLE, DURABLES, ECONOMIC ACTIVITY, ECONOMIC ANALYSIS, ECONOMIC CRISIS, EMERGING ECONOMIES, EMPLOYMENT SITUATION, ENVIRONMENTAL PROTECTION, EQUITY LOAN, EXCLUSION, EXPENDITURE, EXPENDITURES, EXTERNALITIES, FAMILIES, FEDERAL AGENCY, FEDERAL HOUSING, FINANCIAL CRISIS, FINANCIAL DIFFICULTY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKET, FINANCIAL PRODUCTS, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FINANCIAL TOOLS, FIXED RATE, FIXED RATE BONDS, FOREIGN CURRENCY, FOREIGN INVESTMENT, GOVERNMENT ACCOUNTS, GOVERNMENT BUDGETS, GOVERNMENT INVESTMENTS, GOVERNMENT LEGISLATION, GOVERNMENT POLICIES, GREATER ACCESS, GUARANTEE FUND, HEDGE FUNDS, HOME EQUITY, HOMEOWNERS, HOMEOWNERSHIP, HOUSEHOLDS, HOUSING POLICY, INSTITUTIONAL INVESTORS, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INTEREST RATE, INTERNATIONAL MARKETS, INVESTMENT BANK, INVESTMENT CORPORATIONS, INVESTMENT FINANCING, INVESTMENT FUNDS, LAND DEVELOPMENT, LAND USE, LAND VALUES, LEGAL PROVISIONS, LINE OF CREDIT, LINES OF CREDIT, LIQUIDITY, LOAN, LOCAL CAPACITY, LOCAL CURRENCY, LOCAL ECONOMY, LOCAL GOVERNMENT, LOCAL GOVERNMENT BUDGETS, LOCAL GOVERNMENTS, LOCAL SAVINGS, MIGRATION, MORTGAGE, MORTGAGE MARKET, MORTGAGES, MUNICIPAL, MUNICIPAL BOND, MUNICIPAL BOND INSURANCE, MUNICIPAL BOND ISSUES, MUNICIPAL BOND MARKET, MUNICIPAL BONDS, MUNICIPAL DEVELOPMENT, MUNICIPAL INVESTMENTS, MUNICIPALITIES, OLIGOPOLY, OPERATING COSTS, OUTSTANDING BALANCES, OUTSTANDING DEBT, PENSION, PENSION FUNDS, POST-CRISIS PERIOD, PRIVATE BANKS, PRIVATE SECTOR, PROJECT FINANCE, PROMOTION OF INVESTMENTS, PROPERTY LAW, PROPERTY TAXES, PROVISION OF LOANS, PROVISIONING, PUBLIC BUDGET, PUBLIC FINANCE, PUBLIC FINANCES, PUBLIC HOUSING, PUBLIC INFRASTRUCTURE, PUBLIC SERVICES, PUBLIC-PRIVATE PARTNERSHIP, PUBLIC-PRIVATE PARTNERSHIPS, REAL ESTATE, RECESSION, RECESSIONS, REMITTANCES, RESERVES, RETURN, RETURNS, REVENUE BONDS, REVOLVING FUNDS, SHAREHOLDERS, SOCIAL SERVICES, SOCIAL WELFARE, STATE SUPPORT, STOCK EXCHANGE, SUPPLY OF CREDIT, TAX, TAX EXEMPTION, TAX EXEMPTIONS, TAX SYSTEM, TAXATION, TELECOMMUNICATIONS, TRADING, TREASURY, UNEMPLOYMENT, UNION, URBAN DEVELOPMENT, URBAN INFRASTRUCTURE, URBANIZATION, VARIABLE RATE,
Online Access:	http://documents.worldbank.org/curated/en/2009/12/18227250/local-governments-financial-crisis-analysis http://hdl.handle.net/10986/15782
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