Management of local finances in crisis conditions on the example of voivodeship governments in 2019-2021

Abstract

The management of local finances is an intricate process consisting of decisions made by authorized bodies, which, as a result, after taking into account the established goals, both current and strategic, should result in the maximization of socio-economic effects. Indicator analysis is considered one of the important instruments of local government financial management. In the article, based on the data published by the Ministry of Finance, the National Council of Regional Chambers of Accounts and the Central Statistical Office, the financial management of the provincial cross-section of Poland in 2019-2021 was reviewed. The idea of the study was to assess the management of local finances during the crisis caused by the COVID-19 pandemic in synthetic terms, based on the TOPSIS multi-criteria linear ordering method and benchmarking, and to try to identify the factors determining this process. The research was carried out by means of financial analysis of 21 indicators, which were compiled for 16 local government provinces in Poland. The results of the research made it possible to determine the classes of financial condition of the analyzed units. The COVID-19 pandemic caused that in 2020, none of the studied local government provinces ranked in the first class characterizing a very high level of financial condition according to the TOPSIS method, although as many as 9 units were assigned to the second class characterizing a high level of financial condition. Local government provinces in 2019-2021 were characterized by very high development and investment potential, as well as the self-financing rate, they accumulated budget surpluses at the expense of an apparent slowdown in investment activity.