Socio-Economic Impact Assessment


The crisis affects the local government budgets both in terms of own-source revenue and inter-governmental transfers. The low collection of own-source revenue is already disrupting the provision of public services. Given that the VAT grant is based on a prescribed percentage of the past year’s VAT revenue (net) collection by the central budget, VAT grant transfer to municipal budgets will not be affected by the ongoing crisis in 2020. Municipalities will be entitled to 38 million EUR in 2020, which would be an important monetary relief for their budget. However, the general VAT grant in 2021 will be largely affected by the ongoing recession and the reductions in VAT (net) revenue in 2020. The estimates suggest a reduction of the general VAT grant by 7.8% or nearly 3 million EUR which will be reflected in the Supplementary Budget 2020.

Changes in municipal revenues for 2020 compared to 2019

Municipal own-source revenues
dropped by 19%
in the first half of 2020 vs. the same period last year

The share of intergovernmental grants
rose to 69.8%
to compensate for the loss in municipal revenue

As a result, total municipal revenue in the first half of
2020 is up by 6.8%
compared to the same period last year

Municipal VAT revenues