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International Internet Magazine. Baltic States news & analytics Monday, 06.07.2020, 12:43

Tallinn endorses 2019 financial report

BC, Tallinn, 27.05.2020.Print version
The Tallinn city government on May 27th approved the city's consolidated financial report for 2019, informs LETA/BNS.

Mayor Mihhail Kolvart said at the city government's press conference that the city's financial reports have been positive in recent years and the same is true for the report for 2019. 

"Our standing continues to be stable and good, which is demonstrated also by the ratings. The balance of income and expenditures is positive and income grew by 70 million euros compared with the year before, whereas operating expenses grew by only 26 million," Kolvart said.

According to the mayor, this means that the city's fiscal policy continues to be rather conservative and has justified itself. At the same time, the mayor observed that the current situation is entirely different due to the crisis and the impact it will finally have is not yet clear.    "I believe there will be a clearer understanding in September what the standing of the economy is and what are the more detailed forecasts. It can be understood already, however, that we have to be prepared for a negative scenario and the system of the city of Tallinn needs to be optimized already now and possibilities found for saving and cost-cutting," Kolvart said.

The mayor said that where it's necessary to be more cautious when it comes to investments, there is definitely no plan to stop financing investments. He observed that, first, investments enable to enliven the economy, and second, construction prices are much lower during a crisis. "We don't want to give up any of the objects, but we wish for the plan to be consistent with the current situation and to be long-term," Kolvart said.

The city's chief financial officer Katrin Kendra said that the city's consolidation group finished the year with a net result of 114 million euros, of which the result of the city was 109 million euros. The city's liquidity position as at year-end was 88 million euros.

The city's debt burden has become smaller and stood at 16.9% at year-end. The limit permitted under law meanwhile is 60%, and currently 80% due to the crisis. The asset value of the consolidation group as at year-end was 1.75 billion euros and net assets totaled 1.36 billion euros. 

The CFO said that while the city does not need to borrow that much, tapping into existing credit lines might be warranted during the crisis. The city did not draw the loans set forth in its budgets for 2018 and 2019, financing investments with current income and money from the liquidity buffer instead. 

Investments financed by the city during 2019 totaled over 95 million euros, of which 46% was invested in the repair or streets and roads and 29.4% in education infrastructure. 

The biggest investment projects completed last year were Reidi Road, a municipal residential building at the address 10 Paagi Road, the Kaja Cultural Center, the new building of the Mustamae city district government, as well as the Mannikabi and Sitsi kindergartens.

The city's operating expenses totaled 662 million euros, of which labor costs made up 43.7%, subsidies 17.7% and other operating expenses 32.6%. 

International ratings agency Fitch Ratings in April 2019 upgraded the city's credit rating to AA- and affirmed the outlook as stable. In its analysis, the rating agency said that the stable outlook reflects Tallinn's sustained good fiscal performance, high self-funding capacity of investments and sound liquidity. It takes into consideration the city's well-diversified, but modestly-sized, local economy and a stable regulatory regime.

The consolidation group of the city of Tallinn consists of the city and 23 institutions of the city, 248 institutions under the management of the city, nine companies, 12 foundations and one nonprofit organization. The consolidation group employed over 19,000 people in 2019, more than 12,000 of whom were employed in the institutions of the city, including some 9,000 in the field of education. 


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