Abstract
Territorial self-governments in the Czech Republic are municipalities, which are the basic territorial self-governing units, and regions, which are the higher territorial self-governing units. Territorial self-governing units are public law corporations which may own property and manage their affairs on the basis of their own budget.
They are a part of the public sector and they cannot be excluded from rules of budgetary management including indebtedness. The important fact is that their activity is also financed by central government but their economic activity is not under such a burden of mandatory expenditures as it is for the central government's budget.
An enactment of fiscal rules in a form of a statute regulating fiscal discipline is a manifestation of the state's effort to secure budgetary discipline on the level of the central government but it is also a manifestation of a state's effort to limit a long-term using of deficit financing using external sources on all levels of government and also a state's effort to strengthen a co-responsibility for a development of public finance. An important role for a decision making process about granting state subsidy of various forms has public interest and level of indebtedness.