The Challenging Impacts of COVID-19 on Subnational Finances

Operated by LSE Cities, United Cities Local Governments (UCLG) and Metropolis the Emergency Governance Initiative (EGI) provides subnational, regional and local governments with resources and knowledge to tackle complex problems in the field of urban governance and emergency response.

EGI’s latest Analytical Note #3 focuses on the impact of the COVID-19 pandemic on municipal finances. By drawing on results obtained from a survey conducted with finance departments of city and regional governments from 33 territories from 22 countries across the globe in late 2020, the Analytic Note concludes that Local Governments (LGs) are suffering from widespread increases for health-related expenditures. In addition, the Note finds that sectors like infrastructure development and maintenance as well as housing will be extremely affected in future as investments in these areas are already inhibited due to declining local economic revenues and insufficient budget overall.

This decrease in budget paired with increasing financial needs are identified as serious pre-pandemic problems which are now being deepened by the crisis. Through tracing the lack of financial resources of mainly independent Subnational Governments (SGs), the Note pinpoints intergovernmental transfers as the least affected sources of revenue. Therefore, the Note finds that SGs depending on local revenues are more affected and that financial recovery efforts have to be adopted according to existing financial frameworks.

You can learn more about the findings of the Analytic Note #3, EGI’s work and access the Analytic Notes in English, Spanish and French by checking out EGI’s homepage.