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Intergovernmental Fiscal Relations and Decentralisation Process in Croatia

The decentralisation process is considered as an important factor for efficient management of local development. For a successful preparation, implementation and monitoring of decentralisation process an in-depth analysis of local government finances is needed. The latest available data on local budgets for 1999, 2000 and partially for 2001 are analysed, i.e. the system of local public finance and intergovernmental fiscal relations in Croatia is evaluated. Summary of current problems, review of government reform initiatives and elaborate on the need for further fiscal decentralisation on the basis of empirical evidence on the size and growth of the public sector in Croatia are presented. Major aim of this paper is to assess the strengths and weaknesses of local governments’ system of finances and outline the possible approaches to further fiscal decentralisation. In that context, two objectives for further fiscal decentralisation together with measures for their achievement are submitted.

intergovernmental finance, development, Croatia

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