Explanatory note on Local Authorities' norms

The European Regulation on "application of the Protocol to procedures for excessive deficits," determines that the single member States must periodically provide the European Commission with data on the supervision of said procedure. The notification requires real-time knowledge of all borrowing operations concluded by Public Administrations, as identified by the European system of national and regional accounts.

For this reason, please find below the main regulatory provisions in force grouped according to the thematic areas to which they refer, concerning public debt monitoring.

1. BORROWING AND DERIVATIVE OPERATIONS TO COVER DEBT
   
   
   • Ministerial Decree no. 420 of 5 July 1996, "Regulation on norms for Local Authorities to issue securities," article 2, paragraphs 1 and 2, implementing article 35 of Law no. 724 of 23 December 1994, (1995 Financial Law);
   • Law no. 448 of 28 December 2001 (2002 Financial Law), article 41, paragraph 2, which provides for the possibility of modifying mortgages contracted after 31 December 1996, by re-negotiation or placement of securities;
   • Ministerial Decree no. 389 of 1 December 2003, on "Regulation concerning local authorities' and their consortiums' access to capital markets, as per article 41 of Law no. 448 of 28 December 2001";
   • Circular of the Ministry of Economy and Finance of 27 May 2004, published in Official Gazette no. 128 of 3 June 2004, explaining Ministerial Decree no. 389 of 1 December 2003;
   • Law no. 350 of 24 December 2003, (2004 Financial Law), article 3, paragraphs 16 to 21iii, which list borrowing operations, in particular the premium collected at the conclusion of derivative operations provided for by paragraph 17, as integrated by article 62, paragraph 9, of Decree-Law no. 112 of 25 June 2008;
   • Law no. 296 of 27 December 2006 (2007 Financial Law), article 1, paragraphs 736 to 739, which provides for, among other things, prior notification to the Ministry of Economy and Finance of derivative instrument operations for the contract to be valid;
   • Circular of the Ministry of Economy and Finance of 31 January 2007, published in Official Gazette no. 29 of 5 February 2007, explaining Law no. 296 of 27 December 2006;
   • Circular of the Ministry of Economy and Finance of 22 June 2007, published in Official Gazette no. 151 of 2 July 2007, on the non applicability of delegations of payment, disciplined by article 206 of Legislative Decree no. 267 of 18 August 2000, (Consolidated Act of Local Authorities), to derivative operations concluded by local authorities;
   • Law Decree no. 112 of 25 June 2008, article 62, converted by Law no. 133 of 6 August 2008, replaced by article 3 of Law no. 203 of 22 December 2008 (2009 Financial Law) and subsequently amended by article 1, paragraph 572, of Law no. 147 of 27 December 2013 (2014 Stability Law), on containing local authorities' use of derivative instruments.
   • Law Decree no. 66 of 24 April 2014, article 45, passed, with amendments, by Law no. 89 of 23 June 2014, regarding “urgent measures on competitiveness and social justice”, which provides, on certain conditions, for the restructuring of Regions' debt operations.
   • Decree of 10 July 2014 (Official Gazette no. 160 of 12-7-2014) which identifies regions' borrowing operations admitted to restructuring, as per article 45, paragraph 10, of Law-Decree no. 66 of 24 April 2014, passed, with amendments, by Law no. 89 of 23 June 2014.
   
    
2. MANDATORY COMMUNICATIONS
   
   
   • Law no. 488 of 23 December 1999 (2000 Financial Law), article 48, on "Government securities operations on the secondary market and liquidity management," which, in paragraph 2, bestows the Treasury Ministry with the authority to manage the liquidity of Public Administration entities;
   • Ministerial Decree no. 389 of 1 December 2003, article 1, paragraphs 1, 2, and 3, which discipline communications to the Ministry of Economy and Finance of borrowing and derivative operations by local authorities and Regions, and coordinate access to markets;
   • Circular of the Ministry of Economy and Finance of 27 May 2004, published in Official Gazette no. 128 of 3 June 2004, explaining Ministerial Decree no. 389 of 1 December 2003;
   • Law Decree no. 112 of 25 June 2008, article 62, which, in paragraph 7, obliges the Ministry of Economy and Finance to transmit a copy of the documentation received concerning derivative operations to the Court of Accounts every month.

      

3. MAXIMUM RATES APPLICABLE TO MORTGAGE OPERATIONS
   
   
   • Law Decree no. 66 of 2 March 1989, article 22, paragraph 2, converted into law, with amendments, by article 1, paragraph 1, of Law no. 144 of 24 April 1989, on "Urgent dispositions in matters of Local Authorities' taxation autonomy and of local finance." It provides that the Treasury Minister, with a decree of his own, periodically determines the maximum conditions applicable to mortgages to grant to Local Authorities or other procedures aimed at obtaining uniform treatment.
   • Law no. 178 of 30 December 2020 (Budget Law 2021), article 1, paragraph 268, has amended Article 22, paragraph 2, of Law-Decree no. 66 of 2 March 1989, converted, with amendments, by Law no. 144 of 24 April 1989, attributing to the Director General of the Public Debt Directorate the competence to establish the maximum conditions applicable to mortgages to be granted to local authorities, with a determination to be published in the institutional website of Ministry of the Economy and Finance – Department of the Treasury.