Vulnerability and Resilience of Slovak Municipalities in the Era of Austerity

Abstract The consequences of periods of austerity, generally connected with economic crises, are not only reflected in the financial performance of local governments but also in the range in which they can face shocks. Monitoring the vulnerability and resilience associated with these shocks and the subsequent impacts on the financial situation of Slovak municipalities points to financial resilience, the ability to be proactive or, on the contrary, to be passive as a reaction to evolving environmental conditions. The paper examines the ability of 2,923 Slovak municipalities in the period 2005 - 2022, according to their size categories, to respond to periods of austerity in the economic reality of the Slovak Republic: The Global Financial Crisis from 2009 and the recent ongoing economic crisis arising from the crisis COVID-19, the subsequent military crisis in Ukraine, and the related energy crisis (multi-crisis). The resilience and vulnerability of Slovak municipalities, considering the size categories, are measured by employing a primary dispersion measure as the standard deviation of six financial indicators mirroring the local government’s performance in the form of indexes linked to 2005. The results confirm the vulnerability of Slovak local governments in considered eras of austerity with relevant recovery periods, demonstrating a considerable degree of resilience. Besides, we reveal other structural breaks in the monitored period, which influenced the economic circumstances of Slovak municipalities, too.