Local government debt keeps increasing

Ljubljana – The total debt of Slovenia’s 212 municipalities and their utilities increased by a further EUR 47.5 million last year to EUR 971.2 million, or 2.1% of GDP. Average total debt per capita thus increased to EUR 473 in 2020 from EUR 449 in 2019, a report compiled by the Finance Ministry shows.

Gornji Petrovci, a small municipality in the north-easternmost part of the country remains the local community with the biggest mountain of debt per capita at EUR 2,006. Due to borrowing under unfavourable terms in the past, the municipality’s account has been blocked since 2009.

Meanwhile, 12 municipalities had no debt: Bloke, Cerklje, Gorišnica, Gorje, Jezersko, Kranjska Gora, Markovci, Mengeš, Preddvor, Rače-Fram, Starše and Trzin.

The Finance Ministry does not think the combined debt of municipalities and public legal entities at the level of local government is cause for concern.

“Municipalities (also) leverage borrowing to implement investments which translate into payments to contractors, new jobs, improved quality of life for residents, economic activity and GDP,” the ministry said in the report, which was endorsed by the government last week.

The total debt has been increasing since 2018. Compared with 2019 it increased by 5.1%; the debt of legal entities rose by 8.7% and the debt of municipalities by 4.3%.

Excluding public sector legal entities at the level of local government, local government debt increased from EUR 753.3 million at the end of 2019 to EUR 786 million a year later. Most is long-term debt.

Local communities generated a total of EUR 2.327 billion in revenue last year, which is 4.2% more than the year before.

Volume-wise, the capital Ljubljana had by far the largest debt, at just over EUR 100 million, plus as much owed by legal entities at the level of the municipalities.

Maribor, Slovenia’s second largest city, was EUR 46.2 million in debt, Celje had a debt of EUR 34.9 million, Koper EUR 31 million and Kranj EUR 25.4 million.