Banks granted 100m euros to local authorities in Q1

Bankers granted around 100 million euros in funding to town halls and to county councils in the first three months of 2011, nearly six times more than in the corresponding period of last year, according to data from the Finance Ministry.

The amount represents the money drawn by the local authorities in the first quarter based on permits from the Finance Ministry, which include the instalments of the loans taken out previously. Town halls cannot borrow just any amount from the banks, they need to keep within a maximum cap approved by the Finance Ministry in order to limit the budget deficit.

"If the borrowed amounts increased, it means the local authorities are making more investments. The loans are granted for specific infrastructure projects and are guaranteed by the town halls with their own revenues," commented financial analyst Dragoş Cabat.

The biggest amount of funding, over 54 million euros, was granted in February, and includes a foreign loan worth 10 million euros. The loan was granted by Austrian bank HYPO Niederoesterreich to the Oradea town hall for utility infrastructure works for the Eurobusiness industrial park.