The financial rating of the City of Tallinn enables for the city to take out a loan under favorable terms, and Tallinn is planning to use this opportunity to borrow €130-140 million, Mayor of Tallinn Mihhail Kõlvart said on the "Otse uudistemajast" webcast of public broadcaster ERR on Wednesday.
The rating agency Fitch affirmed the City of Tallinn's long-term foreign- and local-currency issuer default ratings at AA- with a stable outlook, even with the expected economic recession caused by the coronavirus crisis. Kõlvart said that considering the city's financial rating, taking out a loan is a good idea.
"A loan must be paid back. But we are definitely getting one because our financial rating allows us to borrow almost free of charge. This is an opportunity we must take this year. And we are taking out a loan, some €130-140 million, definitely. The buffer will be larger, but this is our preliminary plan," Kõlvart told ERR.
Kõlvart noted that at present, there is no clear overview of the impact of the emergency situation and the pandemic on the city budget revenue, as current reports only cover the receipts of the first three months of the year. The city is nonetheless not planning to postpone or cancel any investments planned in the budget.
Kõlvart noted that Tallinn, as Estonia's largest local government, expected a larger support from the state than the 17 million euros allocated for the construction of new objects. He added that the city's budget for 2020 totals €823-824 million, and €17 million is not sufficient for delivering any systematic resolutions.
The mayor of Tallinn opined that linking state support to the construction of new objects is not the best solution, either, as local governments currently need funds to maintain their budgetary position and finish planned projects. He added that no project will cancelled, however, instead some may be postponed until next year.
At the start of April, Kõlvart said that the Tallinn city government is planning to borrow €76.7 million during the crisis.
Editor: Helen Wright