Heraklion Municipality, Crete, Borrows 27 Million Euro to Cover Budget Deficit

Heraklion Municipality, Crete, Takes Out 27 Million Euro Loan to Cover Budget Deficit

During a recent press conference, Mayor Alexis Kalokairinos announced that Heraklion Municipality, the capital and largest city of the island of Crete in Greece, is set to take a 27 million euro loan to address its financial shortfall for the year 2024. The municipality's total obligations for the year amount to 41.5 million euros, whereas its available funds stand at only 14.5 million euros.

The financial strain primarily stems from road construction projects valued at 66 million euros, which have accumulated liabilities for the municipality.

Kalokairinos, while acknowledging the challenges, expressed optimism about the municipality's financial prospects, highlighting its potential for improvement.

The decision to secure a loan was made transparently, in line with the mayor's commitment to openness and accountability to the citizens. Kalokairinos provided detailed information about the municipality's financial situation, emphasising the need to address the deficit promptly.

"It was our basic commitment that we will operate with absolute transparency in all sectors" said Mayor Alexis Kalokairinos, pointing out that: "In this context, we are informing our fellow citizens today about the financial situation of the Municipality of Heraklion. The problems, solutions and priorities of the next day. With no desire to beautify or dramatise reality, we present the financial data with which we will proceed, at least, for the next year."

The mayor also outlined efforts to seek funding from various sources, including European and national programs, to reduce reliance on borrowing in the future. Additionally, plans are underway to enhance revenue collection and optimise municipal resources effectively.

Regarding road construction projects, Kalokairinos expressed the need for transparent prioritisation and proper planning to prevent inefficiencies and ensure quality outcomes.

“Was there a need to do these road works? Yes, and they should be done correctly" pointed out Alexis Kalokairinos, before continuing: "Could the contracts be done in a different way instead of committing the Municipality's own resources, for example through financial programs? Partly yes, is the answer. But resources were committed massively and for a very short time.”

“So the exercise we were asked to solve is how this error can be handled. This over-commitment to which the Municipality of Heraklion was led. How we will ensure the prestige and reliability of our Municipality.

"We could choose to cancel, but that would have negative consequences, financial and otherwise. After a series of contacts and assessing the broader financial situation of the Municipality, we are led – necessarily – to the opening of a financing line, to the possibility of borrowing, in order to balance the budget. I emphasise that the loan is not a panacea. It does not permanently solve the problem. But it gives the necessary breath to close the budget and to be able to proceed to the next steps. With the main objective of improving the ratio of financial programs to own resources in the execution of projects. The rationalisation and financial restructuring of the Municipality of Heraklion."

The mayor of Heraklion Alexis Kalokairinos with the deputy mayor of Finance Giorgos Agrimanakis, during the press conference.

The municipal council is expected to approve the balanced budget after a thorough and bureaucratic process, which is scheduled to conclude by the end of March.

Kalokairinos expressed gratitude to all involved parties for their contributions and support in navigating the municipality's financial challenges.

The press conference, held at the Vikela Municipal Library, underscored the municipality's commitment to transparency and responsible financial management.

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