FISCAL RULES AT THE LOCAL LEVEL ARE A CONDITION FOR STABLE PUBLIC FINANCES IN THE REPUBLIC OF SRPSKA

Abstract

<p><i>The fiscal position of municipalities and cities has a great influence on the overall fiscal position of the Republic of Srpska. Bearing in mind that according to the Law on the Budget System, the budget system of the Republika Srpska consists of the budget of the Republic, the budget of municipalities and cities and the financial plans of the funds, then it is clear that the realization of the budget of municipalities and cities with a high budget deficit represents a great risk for excessive realization of the deficit at the level of the Republic . Republika Srpska does not have defined fiscal rules for local self-government units. However, bearing in mind that according to the Law on Fiscal Responsibility in the Republic of Srpska, the consolidated budget deficit is determined as the sum of consolidated budget deficits, the budget of the Republic, the budget of municipalities and cities, and the budget of funds, it is clear that the realization of an excessive deficit of municipalities and cities affects the fiscal rule on deficit at the level of Republika Srpska. The results of the analysis in this paper indicate the need to introduce fiscal rules for local self-government units. The fiscal stability of local self-government units has a positive effect on the overall fiscal stability of the Republic, especially if mechanisms are introduced to suppress the excessive deficit of local self-government units.</i></p>