Financing of municipal enterprises: European experience

Abstract

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.