73 municipalities have a dangerous combination of high debt, weak operating and little cash. It shows OAG’s investigation of municipal borrowings and debt burden that Tuesday was handed over Parliament.
The last ten years have total local government debt burden increased sharply from 60 to 76 percent of revenues. It gives good reason for concern, says OAG.
Can costly
For if the loan interest rate increases or tax revenue falls, it may have dramatic consequences for the most indebted municipalities.
– Many municipalities will have difficulty servicing their debt if interest rates increase. It can go beyond major tasks that school and elderly care, says Auditor General Foss.
These municipalities have together under one million inhabitants.
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Overall had Kommune Norway a net debt of 244 billion in 2013. Calculations performed earlier, shows that if interest rates rise by 2.5 percentage points, it will mean annual additional expenses of over 9 billion for municipalities, which corresponds to nearly 30,000 nursing and care spaces, or over 85,000 kindergarten.
Will increase debt
The report reveals that 41 municipalities have a debt ratio of more than 100 per cent of income. Yet two of the three municipalities plan to raise the debt over the next few years.
This means that the debt problems may affect several municipalities, according to OAG.
Foss is also very critical of several municipalities borrows money to finance normal operations.
– It is extremely daring and speculative. Then you have to have very secure revenues in view, he states NTB.
Poor informed
The OAG is also critical to the information the elected municipal council receives from his councilors when it comes to finances . The survey shows that only half of the municipalities analyze key figures, giving the elected an insufficient basis for decisions.
Foss therefore sends the following invitation to municipal Minister Jan Tore Sanner:
– He should be more vigilant against councilors municipal consequences high debt burden has, he said.
In addition, Ministry of Local Government and Regional Development consider whether the Local Government Act ensures sustainable debt burden, thinks waterfall.
The Ministry has already stated that they will consider the recommendations of the Auditor General in the light of the setting from municipal legislative commission, which is expected by year end.
– It is well late to treat this when, commenting waterfall. (© NTB)
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