Der Querdenker – Municipality financial report 2015

News about the municipality finances …

The Austrian municipal association published the  Gemeindefinanzbericht 2015. In summary, it can be seen that the communities have done well. The total debt of the municipalities has declined slightly. Fortunately, the municipalities in Lower Austria and Burgenland have reduced their debt levels more clearly than the average of all Austrian municipalities.

Is there a west / east gradient?

The picture above shows the most heavily indebted communities, but also the municipalities with the highest financial strength. In both cases, municipalities from West Austria are in the first place. It can be seen that without investment, no growth and no financial strength can be generated.

Interest rates…

A glance at the interest rate on financial liabilities shows that the average interest rate of municipalities with a population of up to max. 50,000 is around 1.2 percent per year. This appears low at first glance.

If one considers, however, that the majority of these financial liabilities have variable interest rates and are linked to the EURIBOR, then this must also be regarded as a “Querdenker”. The EURIBOR is at its low and has a negative value. As is well known, interest rates can not only fall but also occasionally rise. Not to think, we have ever again a EURIBOR rate b of 2% and higher …

How does an analysis of financial debt help me?

An analysis of your financial debts not only gives you an overview of the status of your finances, but also shows you whether you can still afford new projects in the future or how your status is compared to other municipalities.

The FRC approach is supported by a variety of software programs, which are also used in the banking sector. In particular, we offer a financing check for your existing financing portfolio (loans, leasing), the ongoing management of your individual financing up to the analysis of future projects and their impact on the total debt as well as the “Freie Finanzspitze”. The invitation to tender for new financing including the determination of the best bidder round off our basic package. Thanks to our know-how, our customers benefit not only from a high time saving but also financially. Results in the past have shown that significant savings are possible on an annual basis.

What is the so-called net debt?

If the assets of a municipality are deducted from the financial debt, then the net debt is obtained. In order to quantify the assets of a municipality, they must be valued. We also refer to our own FRC Corporate Blog (VRV 2015) on the topic of evaluating community assets. We are happy to help you here as well.

Please contact us for a non-binding first consultation at [email protected].

About The Author

Heinz Hofstaetter
Over 20 years of international experience in senior management positions in the areas of consulting, banking, finance, asset management, valuation and Real Assets.