Tallinn tries to take another big loan

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Tallinn plans to issue bonds in amount of EEK 100 mln, Eesti Päevaleht reports.

Jürgen Ligi, the Minister of Finance, said that if Tallinn issues bonds in that amount then the state gives less tax money to the capital.

On Monday Ligi sent a letter to Edgar Savisaar, the Mayor of Tallinn, warning him from planned bond emission.

“The City of Tallinn has issued a bond emission prospect to Swedbank on June 29, confessedly to the Ministry of Finance,” Ligi wrote, adding that the planned emission is not in accordance with the laws.

New Rural Municipality and City Budgets Act came to force from March 1 and it says a local municipality can’t take a loan without Ministry of Finance’s permission. Mainly European projects can get that permission.

“We suggest that the city government shouldn’t organize bond emission in cooperation with Swedbank,” the Minister wrote, adding that the Ministry may use its right to retain means of payment in the same amount.

Tallinn’s loan burden made up 55 pct of budget volume on June 1 and when to consider negative supplementary budget, then 60 pct. Loan burden couldn’t exceed 60 pct of budget volume even in the good times.