Institutional portal - Municipality of Milan

The opportunity introduced by Cassa Depositi e Prestiti was seized. Tasca: “Clear savings but now structural measures are needed from the Government to manage the debt”

Milan, October 1 2019 - The work of the Budget Department continues to extend the maturities of the Municipality's debt. The Council has launched a maneuver for the redefinition of existing loans which provides for an extension of the average life of the debt from 15 to 24 years and a redistribution of the principal amount expiring from 2020 to 2043. With this maneuver the intention is to attenuate the effect of the debt repayment on current expenditure, which must cover the principal and interest on an annual basis, avoiding cutting services for the city.

“We are working to remodulate the average life of the debt that the Municipality has contracted with Cassa Depositi e Prestiti - explains Budget Councilor Roberto Tasca -. The maneuver will allow us to lighten the burden of mortgages on current spending, which would otherwise be burdened by a completely incomprehensible burden for the financial solidity of Milan. Initiatives like these are useful to prevent a short-sighted vision of local authorities' debt management from compromising their current balance, even in the presence of conditions of absolute financial rigor. If we did nothing, Milan would repay all outstanding debt by 2035, maintaining an asset that includes, among other things, shareholdings of undoubted market value, such as 25% of A2A. I hope that after this intervention and in the presence of interest rates returning to normal levels, the MEF will also address the issue of local authorities' debt in order to allow further adjustment of maturities and costs to the new market conditions".

The municipal administration has seized the possibility, introduced in July 2019 by Cassa Depositi e Prestiti, to remodulate fixed and variable rate mortgages. This is a measure that allows a new interest rate to be introduced on old mortgages with installments over a longer period, according to the principle of financial equivalence between the old and new mortgage.

The potentially reschedulable loans have a residual debt as of 1 January 2020 of 1,3 billion euros. The remodeling will extend their life until 2043, without changing their financial value.