Longterm investments will see Tallinn's debt burden triple in five years

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Tallinn City Government building at Vabaduse Väljak 7. Source: Siim Lõvi /ERR

By 2025, Tallinn's net debt burden will increase to €331 million to finance long-term projects such as the building and renovation of Tallinn Hospital, Linnahall and Peterburi tee.

At the end of 2020, Tallinn's debt burden stood at €113.6 million but this will triple over the next three years, a budget strategy approved by the city government on Wednesday lays out. The strategy still needs to be approved by the city council.

The net debt ratio in Tallinn was 15 percent at the end of 2020 and will increase to 38 percent by 2025.

The strategy says loan capital of approximately €60-70 million per year will be raised to finance investment projects between 2022-2025. 

Mayor Mihhail Kõlvart (Center) said Tallinn Hospital, Linnahall, the new City Theater and the renovation of Peterburi tee will be the council's largest investmnets. He said exactly how many of them will come to fruition will depend on both the state and the EU.

"It is difficult for us at the moment to predict what the state's participation could be for larger investments. Not to mention that the general state of the economy, including the construction market, is not very clear at the moment. We can only see price rises. It is difficult to estimate how long this [price increase] process will take. It is difficult to assess," he said.

The strategy says Tallinn will not enter into agreements that will lead to new debt obligations, and if possible, favorable long-term capital will be raised from places such as the European Investment Bank or the Nordic Investment Bank.

The existing debt obligations will be refinanced, if necessary, to ensure the stability of loan payments and savings in debt service costs.

Tallinn's institutions also have debts to pay, including West Tallinn Central Hospital, East Tallinn Central Hospital and Tallinn Transport.  

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Editor: Helen Wright

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