This report analyses the risks entailed by the misuse of fiscal transfers from central to local governmentsin nine SEE countries (Bulgaria, Croatia, Hungary, Romania, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, and Serbia). Such transfers are typically a tool of equalisation policies seeking to offset disparities in the economic development of territorial units. When the general rule of law is compromised, however, intergovernmental transfers can be susceptible to corruption riskswhich undermine the effectiveness of these transfers and lead to misallocation or diversion of funds. The distortions created by clientelistic transfers are at risk of being further exacerbated by rigged local government procurement.