After years of lobbying, local government authorities may shortly receive authority to initiate their own fund-raising ventures, including the issuance of municipal bonds.

This recommendation has been accepted by the Joint Select Committee of Parliament on Local Government Reform. In one important proviso, however, any local authority wishing to float a municipal bond would have to prove its credit-worthiness.

Furthermore, each council will not be allowed to exercise its power to float bonds in a manner that would compromise the country's national fiscal policy and targets.

Severe cash shortage

In recent years, several councils, faced with a severe shortage of cash, have complained that they should be given the authority to raise additional funds by floating municipal bonds. This was reinforced when several local government representatives appeared before the committee.

Local government authorities currently receive limited funding, largely from property taxes and motor vehicle taxes.

One of several recommended

The municipal bonds option is only one of several recommended by the parliamentary committee. In its final report prepared for Parliament, the committee said a comprehensive package for proper financing of local government must be established.

This package, the committee said, should include the re-establishment of local rates; allocation of a fixed percentage of national revenues towards local and community development. It should also include revenue sharing from funds earned from "specified local based activities".

Additionally, it has been recommended that a separate dedicated fund be established for rehabilitation of local government roads.