Basic Report

This study consists of 7 major themes under the title of “Strengthening the Soundness of Local Finance for the Advancement of Local Autonomy”. These 7 studies are different from each other in terms of the theme title and contents; however, they all share common aspects in pursuing for the betterment of local fiscal soundness, which is a basic foundation for the advancement of local autonomy. In addition, each study shares another common aspect especially, in critically analyzing the current situations and problems of local finance with objective tools and data, and providing policy proposals for correcting the problems. Most of the countries in the world have suffered economically as well as socially as the global fiscal crisis spreaded out throughout the world since the late part of 2008. One thing vividly confirmed through the global fiscal crisis is that the strength of each country's fiscal condition(fiscal soundness) turned out to be the most important determinant of the overcoming ability to the crisis. Not a small numbers of advanced countries(Greece, Iceland, Ireland, Spain, Portugal, Italy, etc.) became the victims of the crisis because of the high rates of both fiscal deficit and debts. These phenomenon provide precious lessons and meaningful implications to many countries in the world including Korea.On this occasion, both the central and local governments in Korea have to keenly recognize the real fact, and make a lot of efforts to maintain short- and long-term fiscal soundness, and furthermore, to establish a comprehensive management system for boosting-up fiscal soundness which will guarantee the fiscal sustainability of local finance. Compared with other countries, Korea is termed as a fiscally sound country. However, considering the very high increasing rate of public debt both the central and local government level in recent years, it is necessary to make various efforts for improving fiscal soundness. With these facts in mind, the study examines major topics of local finance keenly related to local fiscal soundness, and comes up with proper policy proposals. In particular, the study focused on the topics such as local revenue expansion, rationalization of local government expenditures focusing on social welfare expenses, debt management of local governments, strengthening local finance autonomy, introducing fiscal rules for local government, reshuffling local finance analysis system, and development of block grant system.