Bankers have found clients to lend money to considering privatelending is not recovering and T-bill auctions are not as successfulas they used to be.
Town halls and county councils borrowed more than 1.4 billion RON(about 360 million euros) from January through March 2010, withfour sector town halls borrowing 200 million euros in Januaryalone, reveal the data published on the e-licitatie.rowebsite.
For instance, Sector 1 Town Hall borrowed 298 million RON (some 70million euros) from BCR in January, the biggest loan granted sincethe beginning of 2009. The loan accounts for one quarter of lastyear's budget, about 1.2 billion RON.
Sectors 3,4, and 6 borrowed 116 to 279 billion RON from BCR thesame month. Most of the money comes in form of investment loans,according to the e-licitatie.ro data, but sector town hallofficials would not provide any comment on this over thephone.
Analysts say that financing granted to local authorities can be analternative for banks at a time when private lending is almostfrozen, though a short-term one. "Lending money to localauthorities is a solution for banks, but not a long-term one,because repayment problems are starting to occur here, whileinterests are going down," comments financial analyst DragoşCabat.
In addition, town halls cannot borrow as much as they want, as theyhave a cap approved by the Finance Ministry to contain budgetarydeficit. Usually, town halls draw their money from lines of creditfrom banks over several of years precisely to comply with thecap.
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