Croatia: Instruments of Fiscal Equalisation

Abstract

The aim of this chapter is to present the administrative-territorial structure of Croatia and describe the process of fiscal decentralisation. Particular attention is given to the functions devolved over time and revenue sources for financing of decentralised functions and an overview of local government units (LGUs) borrowing, debt and contingent liabilities. The emphasis of the chapter is on LGUs’ capital investments and financing from European Union (EU) funds, as Croatian experience in the EU might be of interest also for other countries within the region. The phases of fiscal decentralisation in Croatia follow the evolution of the fiscal equalisation and general LGUs’ financing system, constantly exposed to political influence.