Local government cash flow situation as viewed from the fiscal indicators of the Assessment of Fiscal Conditions

Taro Ohno, Mitsunari Ishida and Wataru Kobayashi
Additional contact information
Taro Ohno: Chief Economist, Policy Research Institute, Ministry of Finance
Mitsunari Ishida: Associate Professor, Faculty of Economics, Toyo University
Wataru Kobayashi: Professor, Faculty of Policy Informatics, Chiba University of Commerce/ Senior Research Fellow, Policy Research Institute, Ministry of Finance

Public Policy Review, 2022, vol. 18, issue 2, 1-29

Abstract: From the viewpoint of confirming the certainty of repayment of fiscal loans to local governments, the Ministry of Finance (MOF) has been conducting the Assessment of the Fiscal Conditions of local governments by creating an Administrative Cash Flow Statement that focuses on cash flows by recombining existing account settlement statistics. This paper uses the fiscal indicators (FY2007-FY2018) to clarify the characteristics of the indicators and examine the cash flow situation. In recent years, while local governments have improved their accumulated and real debt situations, the administrative current balance ratio, which represents the account balance condition, has declined, and their cash flows are becoming increasingly severe. As a result, the number and potential members of local governments that fall under “Fiscal Considerations” based on the diagnostic criteria for the Assessment of Fiscal Conditions have been increasing, and it was found that the increase in expenditures due to property, assistance, and subsidy expenses has contributed to this increase. When the amount of revenues from the hometown tax donation is large, the administrative current balance ratio may apparently deteriorate. However, this does not affect the results of the study. The Assessment of Fiscal Conditions is an effective indicator for understanding the cash flow situation of local government and is also useful from an academic point of view.

Keywords: local governments; local public finance; administrative cash flow statements; Assessment of Fiscal Conditions (search for similar items in EconPapers)
JEL-codes: H70 H77 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mof.go.jp/english/pri/publication/pp_review/ppr18_02_04.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mof:journl:ppr18_02_04

Access Statistics for this article

More articles in Public Policy Review from Policy Research Institute, Ministry of Finance Japan Contact information at EDIRC.
Bibliographic data for series maintained by Policy Research Institute ().