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Saturday, April 13, 2024

The total debt of the municipalities is literally galloping

Since year 2007, total indebtedness of all Slovenian municipalities has increased by 2.7 times, or by a whopping EUR 577 million, from 344.4 to 920.7 million euros. In year 2019 alone, total municipal debt increased by 8.2 percent, or EUR 70 million, in a year.

The largest Slovenian municipalities Ljubljana and Maribor crossed all borders. Both increased their debt by more than 14 percent last year, with the municipalities, already having more than € 251 million in debt, which is about € 30 million more than in a year 2018.

Revenues of all Slovenian municipalities and their indebtedness

Revenues of all Slovenian municipalities in year 2019 were € 2.23 billion, spending € 2.24 billion or € 11 million more than revenues. These are preliminary estimates, issued by the Ministry of Finance, in the most recent review of fiscal developments. Of this total, only € 680 million was earmarked for investments, which is less than a third of all expenditure, or 30 percent of all money spent.

Last year, municipal revenues were a good 77 million euros higher than the year before, receiving 3.6 percent more money. Of these, from the European funds, only € 3.5 million was received by all of Slovenian municipalities.

Regardless all of this, the municipalities was again in debt last year. At the end of the year, municipalities were in total almost EUR 923 million in debt, which means that every Slovenian citizen on average was indebted for 449 euros. The total debt of all municipalities in Slovenia was € 70 million higher than in year 2018. At the end of year 2018, municipalities were total almost € 853 million in debt, with an average debt per citizen of € 414.

As of year 2016, debt per citizen amounted to EUR 407, which means that in the three years till the end of year 2019, the indebtedness of Slovenian citizens, due to the indebtedness of municipalities, increased by EUR 42 or by 8.4 percent.

Most indebted and indebtedness of the municipalities

The most indebted municipality per citizen is Gornji Petrovci, followed by the municipality of Sentrupert. There are only thirteen municipalities not in debt. Back in year 2016, there were 16 of them.

Koper is the leading city in terms of debt per citizen, but data show us that Ljubljana is by far the most indebted. The debt of this municipality is non-stop steadily increasing. At the end of year 2019, it was already indebted for € 175.3 million. The next is the municipality of Maribor, which has a debt of € 76.1 million.

In total, the two largest Slovenian municipalities are already in debt for € 251.4 million, which is 27.2 percent of the total indebtedness of all Slovenian municipalities. At the same time, the indebtedness of other smaller municipalities, where the amounts are high, relative to the debt indicator per citizen, is literally waning.

Gornji Petrovci has been one of the most indebted Slovenian municipalities for many years. The reason is that they have been taking unfavourable loans and have blocked the municipal bank account since year 2009. Due to this, the municipality also has great difficulty in settling its obligations and performing its tasks. Debt per citizen has been increasing over the years, but this is also due to population emigration.

The municipality of Sentjernej is among the first five the most indebted municipalities, but here the debt has increased due to the investment in kindergarten. In addition, the municipality has been paying monthly obligations to finance the construction of a wastewater cleaning plant, the owner of which will become the municipality, after the concession period expires. Based on Slovenian accounting standards, this type of financing is considered as a finance lease. There are different problems in the municipality of Sentrupert, but more of them are in a specific context. The municipality of Litija also has EUR 1,025 per citizen debt, the reason being mainly due to the high indebtedness of public sector legal entities in their municipality.

The high indebtedness is due to the work of the Sarac government

According to the preliminary estimate, the municipalities increased their indebtedness in year 2019 also because the state was allocating too little money to cover their obligations, assumed by the government of Marjan Sarac. These are lump sums, where they have estimated that they will be short of around € 145 million in year 2020. Another reason is the extremely low absorption of all European funds.

Due to the ineffectiveness of the Sarac government, the municipalities had to use their own funds for their investments. They have no money, so they have to make extra loans. To all this, let us add, that the city of Ljubljana is really “something special”. That’s where the story is completely different. They have enough money, but the issue is its rational use.

The hidden borrowing of the municipality is also a major problem

According to the Ministry of Finance, the municipality of Sentrupert was indebted for € 3.44 million at the end of year 2019. However, Mayor Andrej Martin Kostelec states, that these are all loans to banks and that the former mayor Rupert Gole has hidden indebted the municipality in two more cases. One is to pay for a kindergarten rental and to pay off a public-private partnership contract in sum of € 1.5 million. The second is hidden financing or actually a security deposit for the Intergenerational centre in the amount of € 840 thousand, with an interest rate of 12% in a case of a refund. This project was even not carried out, the municipality was heavily damaged and two criminal charges were also filed on suspicion of committing the crime of harming the municipality. Let us add that the regular budget, of the municipality of Sentrupert, is only € 2.5 million a year.


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