Financing of municipal enterprises: European experience




municipalowned enterprise, public services, local authority, EU countries, financing.


Introduction. The article studies the practice and methods of the municipal owned enterprises management in the EU, including methods of forming their capital.

Problem. Ukrainian decentralization reform has increased the scientific interest in the problematic issues of municipal owned enterprises’ financing. Military aggression against Ukraine have raised these issues.

The aim of the article is disclosure, systematization and generalization of European experience in the organization, management and financing of municipal in European countries and development of proposals for the use of best practices in Ukraine.

Methods. Methods used: historical, genera­lization; analysis using tabular and graphical; inductive; abstract-logical.

Results. The practice of the municipal owned enterprises capital formation is characterized by the two types of relations: full ownership of the municipality or mixed ownership. The number of the municipal owned enterprises in the EU has increased in recent years, but this growth has been uneven. Provision of financial support to such enterprises by local authorities is carried out in the following forms: grants, tax conditions, loans and direct financial support.

Conclusions. There is no unified practice for the financing of municipal enterprises in the EU, as there is no significant diversity in terms of countries. There is also no significant trend towards total privatization, in many European countries the number of utilities is growing, which indicates the increasing of the public sector influence on the economic situation in the EU. The solution to the problems of our municipal companies must lie in the adoption of the best European practices. In particular, the provision of grants to finance socially significant enterprises or enterprises in financial difficulties can be considered as one of the best practice.

Author Biography

Kateryna BAGATSKA, State University of Trade and Economics

PhD (Economics), doctoral student of the DepartmentofEconomics and Business Finance


Grossi, G., & Reichard, C. (2008). Municipal corporatization in Germany and Italy. Public management review, 10 (5), 597-61. [in English].

Białek-Jaworska, A. (2021). Revenue diversification and municipallyowned companies’ rolein shaping the debt of municipalities. Annals of Publicand Cooperation Economics, 1-45. DOI: 10.1111/apce.12358 [in English].

Białek-Jaworska, A., & Stobieniecka, W. (2020). Dolocal government susemunicipalcompanies for off-balance-sheetfinancing. Central European Economic Journal, 54 (7), 242-257. [in English].

Jedynak, T., & Wasowicz, K. (2021). The relation ship between efficiency and quality of municipallyowned corporations: Evidence from local public transport and wast emanagement in Poland. Sustainability, (13). [in English].

Voorn, B., van Genugten, M., & Van Thiel, S. (2020). Performance of municipal lyowned corporations: Determinants and mechanisms. Annals of Publicand Cooperation Economics, 2(91), 191-212. DOI:10.1111/apce.12268 [in English].

Voorn, B., Genugten, M. L., & Thiel, S. (2017). The efficiency and effectiveness of municipal lyowned corporations: a systematicre view. Local Government Studies, (Vol. 43), 5, 820-841. [in English].

Leviäkangas, P., Herrala, M., Pakkala, P., Nokkala, M., Rönty, J., Finnilä, K., Haapasalo, H., & Talvitie, A. (2011). Owner ship and governance of Finnish in frastructurenet works. VTT Publications. [in English].

Daiser, P., & W. Wirtz, B. (2021). Strategic corporate governance factors for municipal lyowned companies: Anempirical an alysis from a municipal perspective. International Review of Administrative Sciences, 87, 135-153. [in English].

Bergh, A., Ó Erlingsson, G., & Wittberg, E. (2020). Whath appens when municipalities run corporations? Empiricale vidence from 290 Swedish municipalities. IFN WorkingPaper, (1353). [in English].

Does the governance of municipalty-owned enterprises ensure the effective and transparent activity of the enterprises. Executive summary of the public a uditreport. (2017, 25. 04). National Audit Office of Lithuania. [in English].

Municipal lyowned enterprises. (2018). UNDP. [in English].

Local public companies in the 25 countries of the EU (2004). Official site of the Federation of Local public enterprises in France. [in France].

Panorama of EPL in Europe. (2021). Official site of the Federation of Local public enterprises in France. [in France].

Naselennja Jevropejs'kogo Sojuzu. Vikipedija. [The population of the European Union. Wikipedia].Населення_Європейського_Союзу [in Ukrainian].

Prokhorov B., Babakishieva G., Bagatska K., Zeleniak O. (2021). What to do with MOEsin Kyiv. Research. The centre of the economic strategies. [in Ukrainian].

Prokhorov, B., Lonevskyi, O., & Vartovnyk, I. (2020). How to over come in efficiency of municipalenter prises? (Policy Paper, August 27, 2020). [in Ukrainian].

Bagatska K. (2020). One step away from bankruptcy: Why most MOE sare in efficient and unprofitable and how this can be changed. Economichna pravda. 20.10.2020. [in Ukrainian].



How to Cite

BAGATSKA К. (2022). Financing of municipal enterprises: European experience . oreign rade: onomics, inance, aw, 122(3), 110–118.