Reforming Fiscal Equalization Transfers for Local Governments: Lessons for Poland

December 11, 2014

WARSAW, December 11, 2014 – A well-designed system that shares revenue and responsibilities between different levels of government (fiscal equalization transfers) is key to ensure that all Polish citizens have access to good quality public services, regardless their geographical location.  As Poland embarks upon reforming the current system, it is seeking to draw on the experiences of other countries in the area of sub-national government financing.

To address these issues, a joint World Bank and Ministry of Finance workshop was held in Warsaw on December 11, 2014. The discussion among participants representing subnational government associations, local government units, think-tanks and researchers, World Bank and international experts, focused on the key questions that need to be considered in reforming the current Polish system, while highlighting relevant lessons from international experiences.

There is no single ideal system for fiscal equalization transfers, with many technical and political considerations unique to each country. Considering the experiences of other countries can be helpful in considering such questions as: what should be the basis for equalization (revenue, expenditure, needs etc.), and how to implement the equalization formula?  Solutions and practices in Denmark, Switzerland, Germany and Canada can help inform the process of change, although the final outcome is likely to be uniquely Polish.

“Poland needs to find its own way of designing and implementing the reform. We understand that there is no ‘best practice’ model, although there may be good and better practices – to be further developed by the Ministry of Finance,” said Mateusz Szczurek, Minister of Finance.

Facilitating knowledge sharing is at the core of World Bank’s program in Poland. In a highly sophisticated client country like Poland, knowledge sharing is a two-way partnership.

“The World Bank has been involved in the subnational issues in Poland for quite some time and we are pleased to be able to now support the Ministry in its plan to reform the equalization transfers. Today's workshop has been an unique opportunity to offer global knowledge but also to learn from how Poland chooses its own design,” said Mamta Murthi, Country Director for Central Europe and the Baltic Countries at the World Bank.

Media Contacts
Ministry of Finance In Warsaw:
Wiesława Dróżdż
Tel : +48 22 694 40 76
World Bank In Warsaw:
Dorota Kowalska
Tel : +48 518 464 430
In Washington:
Kristyn Schrader-King
Tel : +1-202 458 2736