Municipal debt

The total amount of debts of the Flemish municipalities is bigger than these of the Flemish region. A few years ago, the Flemish government took over a big slice of the total municipal debt. Thanks to this takeover, the Flemish municipalities have their debt more in control.

Nevertheless, the total amount of debts of the 308 Flemish municipalities raised the past 2 years with 14 % (up to 10.77 billion euros). This is much more than the debt of the Flemish region.

The city with the largest debts in Flanders is Antwerp with 1.049.797.498 euros. The city who is ranked secondly, is Ghent with 442,171,279 euros. It doesn’t astound that Antwerp and Ghent have the greatest amount of debts, as they are the biggest cities of Flanders. Somehow have these cities a big impact on society.

There are different types of debt. On the local scale, we divide them in short-term debts and long-term debts. The short-term debts of all the municipalities are 3.43 billion euros. In contrast to these, the long term debts are notably higher (7.35 billion euros). However, these debts must be seen in perspective because the acquisition of the shares of Electrabel happened after these numbers were published.

But when we compare these numbers, we must be aware of the fact that in 2014 a new model with obligations was introduced: BBC (beheers- en beleidscyclus). Municipalities and public services must prepare, budget, implement, monitor and evaluate their policies. The BBC connects the financial aspects with the policies of municipalities (something the elderly legislation did not took into account). So not all the big changes are the result of the society, some changes are the result of this new model. Although it stays difficult to incorporate conclusions around this relation.

Long-term debts

One of these changes is that the municipalities must provide some facilities. You can see that these facilities occur on the graph from 2014 (when the model was introduced). Despite of the growth of these facilities, are the financial long-term debts just slightly increased with 36 million till 7.3 billion euros. The outstanding loans (long-term debts) decreased with 375 million euros. This interrupts the rising trend since 2009. Municipalities search for more alternative funding forms.

Short term debts 

When we look at the short-term debts, we can see that they are notably increased between 2013 and 2014 with 1.25 billion euros. That is a growth of 58 %. Again plays the case of Electrabel a big role in this rise. If we do not take this case into account, there would only be a growth of 502 million euros. At the graph, you can see that the financial short-term debts in recent years are rapidly rising. This means that the municipalities using more funding forms on short-term instead of the traditional long term loans.

Financial debts

The total amount of financial debts (regardless of the term) is decreased for the first time since the year 2009. At the end of 2014, the financial debts were 7.8 billion, while in 2013 these debts were 8 billion euros. This is a drop of 196 million euros. A possible reason of these drop is that the investments were less needed because of the delay of the multiannual plans. Other debts 

A congregation contributes more than only his own municipal debts. When the OCMW’s (Public Centre for Social Welfare) does not possess the necessary funds, cities and municipalities are responsible for the debts of them. These debts raise more and more each year.

But there is another factor that occurs in municipal debts: the loans who are charged to third parties. These are loans that a municipality entered into, instead of other agencies/parties in the municipality, because a municipality can restrain better conditions. But it is the task of the third parties to pay off these debts. These loans contain a double risk: these debts are not included in the official debts figures. Thereby seems the financial situation of many municipalities better than it actually is. A second risk of these loans charged to third parties is that the municipalities are responsible for the loans, if the third parties cannot pay the deferred terms. Also these kinds of liabilities are climbing in the debts storage. These debts are concealed and dangerous for the credibility of the Flemish municipalities.