Institutional portal - Municipality of Milan

Positive opinion on the city which however is held back by the poor performance of the national economy. Tasca: “The lack of fiscal autonomy penalizes us. The new government must take notice of the Milan case"
 

Milan, September 11 2019 – FitchRatings certifies a positive rating for the city of Milan despite its confirmation at BBB with a negative outlook. The city is held back by the poor performance of the national economy but receives an 'A' in the Stand Alone Credit Profile, the autonomous credit profile, which takes into account the robust setting of the municipal budget, the spending and debt capacity and the wealth produced in the city.

“Milan today more than ever is penalized by the national trend – states the budget councilor, Roberto Tasca –. There are structural reasons to hold back a healthy city. It is the poor or almost zero tax autonomy compared to the State and the zero growth of Italy that penalizes us. We await the decisions of the new Government regarding large cities to continue planning our future. Fitch's report card confirms what we've known for some time. Milan is growing and its administration is robust and far-sighted. In these conditions, a greater margin of autonomy and revision of the rules with which large cities must manage debts and investments would be sufficient. I expect these issues to be addressed from the new government."

The almost lack of taxability and the lack of autonomy from the State in fact nail the BBB's opinion on Milan with a negative outlook. Report card which is closely linked to Italy's poor performance, despite the city growing at a rate of 2 percent compared to the country's zero growth and generating 5 percent of the entire national GDP. Furthermore, Milan suffers from low revenue from state transfers (only 14 percent of total revenue), while it contributes 125 million a year to the national equalization fund.

FithcRatings maintains an 'A' in the standing Alone Credit Profile, which means that the standalone credit profile is very high. Playing in favor, among other factors, are future urban growth which will bring benefits to the Municipality's coffers and the 2026 Olympic Games which project Milan into the future and increase its attractiveness. 

According to the rating agency, Milan can count on an Administration that has solid experience in cost control and which, between 2011 and 2018, kept the growth of expenses below that of operating revenues.

Furthermore, Milan's net debt, of approximately 3,1 billion euros compared to 4,1 billion in 2010, is expected to continue to decrease by 2021, even taking into account a long-term economic recession. Fitch believes the city's debt profile is "conservative" and ensures the city's finances will hold up even in the face of interest rate increases.