The Alternative Sources of Financing Polish Regional Development in the Context of the New EU Financial Perspective

The newly-elected representatives of local governments will face a considerable challenge related to the distribution of funds from the EU central budget and the 2021-2027 Financial Perspective’s budget. Due to the fact that Poland will be allocated less monies from the new cohesion policy, our local government need to look for the additional sources of external financing. Financial instruments such as loans and bonds are still the most popular forms for obtaining capital, but more and more often local governments start to reach out for the still underestimated forms of raising funds, as public-private partnerships or debt redemption.

Both the invited speakers and the moderator – former Prime Minister and economist Mr Jan Krzysztof Bielecki  discussed the alternative sources of financing regions during one of the debates held during the 5th European Congress of Local Governments.

As Andrea Gallo, publisher of the Italian  magazine ‘FASI.biz’ remarks, the main problem that Italy has isn’t the amount of money that it gets from the EU budget, but the way it spends it.  In Italy cooperative arrangements just like the PPP are used very often – there are currently over 1750 partnerships in Italy, most in the transport sector and worth over 360 million Euros. (Gallo based on the European Investment Bank reports). However, due to the lack of strategic approach and developed legal norms, Italian partnerships are not very well managed, what is more, they face enormous costs and misuse of collected funds.

Gallo admitted that Italians have a problem with the full use of funds allocated by Brussels. Typically, a part of the allocated money is not well distributed and must be returned to the Union’s budget. On the other hand he had praised Poland for the excellent policy of managing EU subsidies.

Jarosław Jóźwiak, Deputy Mayor of Warsaw in 2014-16, supported Gallo’s point of view that Poland perfectly knows how to use the EU funds. He said that in most Polish cities, lots of investments and projects were still awaiting implementation, for example, the Curie-Skłodowska Bridge or the second metro line. However, it is necessary to take into account that the implemented project must be maintained at its own expense.

The speakers emphasised the necessity to raise funds from other sources. Nowadays, the EU funds are the easiest way to co-finance the investment, however, it is a drying source of monies because of the financial gap that will be created after the exit of the United Kingdom from the Union, among other reasons.

Piotr Sękowski from the Polish Development Fund mentioned that the basic Polish problem in the development of PPP is the lack of ability to manage them and the lack of available reliable analysts. He noted that because of that there are few examples of successful public-private partnerships in our country.

Jakub Szymański, the Director of the Operational Program Management Department of the Małopolska Marshall’s Office, said that the most important thing is to focus on under what conditions can the acquired funds be spent. The projects that were implemented form 2007 to 2013 were financially concluded already and Poland didn’t have to repay any of the funds – this was a great success. However, Poland still needs to change its way of thinking – we should invest more in projects that will bring profit in the future.

Dr Jacek Sierak – adjunct student at the Lazarski University, summarized the debate. He concluded that the  Polish investment gap is a structural problem. Polish regions need money and it will be difficult to find the required amounts only relying on the regional budgets. Projects should therefore be co-financed with alternative sources.