Senior Executives

1
Local and regional public finance in the
European Union Trends 2000-2005
Bruno DeletréExecutive Vice-President Public
Finance, Dexia
20 December 2006, Brussels
2
A European bank with an international dimension
Australia Austria Belgium Bulgaria Canada Czech
Rep. France Germany Hong-Kong Italy Ireland Israel
Japan Luxembourg Mexico The Netherlands Poland P
ortugal Romania Singapore Slovakia Spain Sweden Sw
itzerland United Kingdom United-States
24 000 people in 26 countries
DEXIA
DEXIA
Organised around 4 business lines
Public Project Finance Credit Enhancement
Asset management insurance services
Treasury Financial Markets
Personal Financial Services
Public/Project
Investment
Treasury
Public/Project
Investment
Treasury
Personal
Personal
Finance and
Management
and
Finance and
Management
and
Financial
Financial
Credit
and Insurance
Financial
Credit
and Insurance
Financial
Services
3
Research activities on the European territorial
public sector
Periodical the annual Economic Outlook on
sub-national public finance in the European Union
and the set of factsheets
Synoptical tables LPC, hospitals

• Paper and electronic publications
• The newcomer local government staff
• Books planned for 2007-2008 Hospitals, local
  and regional finance in the EU27, social housing
  in Europe

4
2006 new publications

• The Economic Outlook on "Sub-national public
  finance in the EU Trends 2000 2005"
• An annual survey (6th edition)
• Institutional and financial situation of the
  sub-national public sector in the 25 EU Member
  States
• A set of fact sheets detailing key data on the EU
  Member States local and regional public sector
• Detailed statistics for each country
• Sub-national governments, economic weight and
  financial aspects of the sub-national public
  sector, structural funds 2007-2013, town twining.

5
Presentation

• Territorial organisation in Europe
• The economic weight of the regional and local
  governments
• Territorial public expenditure
• Territorial public capital expenditure
• Territorial public fiscal revenues
• Local and regional public deficit and debt

In the following presentation, financial data
relates mainly to the "local and regional public
sector ("territorial") as opposed to the
"sub-national public sector" which includes the
Federated States
6
A great variety of territorial organisation in
Europe

• Around 89,200 territorial governments in Europe
• Three federal countries
• 22 unitary countries organised in 1, 2 or 3
  tiers
• 8 countries with 1 level
• 8 countries with 2 levels
• 6 countries with 3 levels

89,250 sub-national governments with the
Federated States
7
88,000 municipalities in the EU
¾ of the total number of European municipalities
are located in 4 countries
Municipality average size in the EU 5,180 inh.
8
Institutional and territorial trends
More regionalisation
Further decentralisation
Creation of regions

• 1999 16 regions in Poland
• 2001 14 regions in Czech Republic
• 2002 8 regions in Slovakia
• 2007 5 regions operational in Denmark
• 2009 14 regions operational in Slovenia

Mergers of municipalities
Inter-municipal cooperation
9
Territorial public expenditure in 2005 12.7 of
GDP
In of GDP
Denmark
Sweden
Spain
Finland
Netherlands
Italy
Poland
UK
Hungary
Czech Rep.
France
Latvia
Slovenia
Estonia
Lithuania
Austria
Germany
Belgium
Slovakia
Ireland
Portugal
Luxembourg
Greece
Cyprus
Malta
0
5
10
15
20
25
30
35
10
Evolution of the territorial public expenditure
2000-2005
11
Average yearly territorial expenditure growth
2000-2005 3.6
12
Evolution of the territorial public investment
2000-2005
13
The importance of the territorial public sector
as a public investor
14
Territorial public investment / public investment
in 2005 63.9
Highest growth in volume in 2005 ()
60
50
40
EU local and regional
average in 2005 1.4
30
20
10
0
Spain
Slovenia
Poland
Greece
Cyprus
Belgium
Slovakia
Latvia
15
PPP, an alternative to purely public or privately
financed projects
A global contract between a public entity and a
private one to design, build, finance, operate
and maintain an asset in order to provide a
service to the public sector in return of an
ongoing fee based on avaibility or demand.
16
The regulatory framework in Europe
Netherlands
Finland

• PPP Task Force 1999
• Transportation
• Water
• Ports

Belgium

• Transportation
• Education

• PPP legislation for
• the Flemish region
• Transportation
• Water/Sewage
• Education
• Healthcare

Germany

• PPP Task Force
• since July 2004
• Homeland security
• Education
• Infrastructure

?
?
Greece

• PPP legislation since 2005
• Transportation
• Education
• Healthcare

?
?
?
Italy
Spain
Luxembourg

• PPP legislation
• since 2002
• Transportation
• Healthcare

• Transportation
• Education
• Healthcare

• 2003 law on
• concessions
• Transportation
• Infrastructure
• Healthcare

? countries with a strong PPP culture

• Green paper of the European Commission (April
  2004)
• Eurostat rules on the accounting status of PPP
  (February 2004)
• Non legislative resolution of the European
  Parliament (October 2006)
• European PPP Expertise Centre (EIB)

17
Evolution of territorial tax revenues 2000-2005
18
Territorial tax revenues in 2005 4.7 of GDP
Highest growth in GDP between 2000 and 2005
19
The territorial public deficit is under control
0.23 of GDP in 2005
20
The territorial public debt remains stable over
2000-2005
of GDP
8
7
633 bn
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
2005
21
The territorial public debt in 2005 5.8 of GDP
Highest growth in GDP between 2000 and 2005
Including Federated States
22
Debt breakdown by public actors in the GDP
Greece
Italy
Belgium
Malta
Cyprus
Germany
France
Portugal
Austria
Hungary
Netherlands
Sweden
Spain
United Kingdom
Poland
Finland
Denmark
Slovakia
Czech Rep.
Slovenia
Ireland
Lithuania
Latvia
Luxembourg
Estonia
0
20
40
60
80
100
23
Conclusion

• The decentralisation process is continuing in
  Europe
• Local and regional governments have become major
  actors in the European economies their
  expenditure account for 12.7 of GDP
• The local and regional public sector is the
  leading public investor it ensures 63.9 of all
  public investment
• Local and regional fiscal ressources are growing,
  mostly to compensate the financial costs of the
  new responsibilities 4.5 per year in volume
  over 2000-2005
• Local and regional public deficit and debt remain
  limited respectively 0.2 and 5.8 of GDP.
• Important cross-national variations