With 22+1 truths, the faction of Kostas Bakoyannis<\/b> “Athens Up”<\/b> provides information on the mammoth loan received by the administration of Haris Doukas<\/b>, as\u2014as it notes\u2014 \u201cthe people of Athens have a right to know.\u201d<\/p>\n
According to a statement from the political faction, the 75-million-euro loan, which the Douka Municipal Authority is proceeding to take out suddenly and unjustifiably, is larger than the total current outstanding debt of the Municipality of Athens<\/b> and, as noted, \u201cwill financially bind the Municipality until 2046, affecting not only the current administration but also future municipal terms.\u201d<\/b><\/p>\n
The energy upgrade of schools <\/b>cited by the Douka Administration, according to the faction, is a pretext. The truth is \u201cthe administration\u2019s incompetence and support for the mayor\u2019s political ambitions.\u201d<\/p>\n
\u201cNo one disputes the need for better schools, the energy retrofitting of buildings, and the challenges of the climate crisis. <\/b>For this reason, after all, during the previous term, over 50 million euros were invested, without the Municipality borrowing a single cent.<\/b> Today, however, the City of Athens has 14 million euros available for schools, which, for some inexplicable reason, are not being utilized,\u201d notes Kostas Bakoyannis\u2019s political faction.<\/p>\n
With the central message that \u201cAthenians have a right to know the whole truth,\u201d \u201cAthens Up\u201d sets out what is actually true:<\/p>\n
This is the most important financial decision of this term<\/b><\/p>\n
It is not a decision regarding a construction contract, nor a procurement. Nor is it even a budget revision.<\/p>\n
This is a new loan of 75 million euros and a decision that will remain in effect until 2046, affecting municipal budgets for two decades.<\/p>\n
This decision will affect future generations of Athenians.<\/p>\n
And that is why this responsibility is far greater than any other.<\/p>\n
Athens invested in schools, without burdening the city with new debt<\/b><\/p>\n
The previous municipal administration recognized the problem with school infrastructure from the very beginning. And decided to drastically increase funding for schools. Without saddling the city with 75 million euros.<\/p>\n
In total, we put out to bid projects worth approximately 57.1 million euros. And there is one more crucial point: the current administration inherited active construction projects, active contracts, and uncompleted project balances.<\/p>\n
A historic decision is being rushed through<\/b><\/p>\n
The biggest financial decision of the term has arrived:<\/p>\n
\u2022\twith an emergency Municipal Committee<\/p>\n
\u2022 without substantive public consultation<\/p>\n
\u2022 without a special session on the financial data<\/p>\n
\u2022\twithout sufficient time for review<\/p>\n
The bigger the decision, the more extensive the consultation must be. Here, the exact opposite happened.<\/p>\n
A blank check is being requested<\/b><\/p>\n
The proposal does not provide an exhaustive analysis of the loan. It does not thoroughly analyze the projects.<\/p>\n
\u2022 Which schools?<\/p>\n
\u2022 Which projects?<\/p>\n
\u2022 At what cost?<\/p>\n
\u2022\tWhat are the priorities?<\/p>\n
\u2022 What is the timeline?<\/p>\n
We know almost everything about the loan. We know almost nothing about the investment program.<\/p>\n
The process is backwards<\/b><\/p>\n
The correct order is:<\/p>\n
First the projects. Then the budget. Then the alternative financing options. Then the financial assessment. And finally, the loan.<\/p>\n
Today, exactly the opposite is happening.<\/p>\n
The Municipality is increasing its liabilities without presenting a rationalization plan<\/b><\/p>\n
With the new loan:<\/p>\n
\u2022\tliabilities increase<\/p>\n
\u2022 interest increases<\/p>\n
\u2022\tinstallments increase<\/p>\n
\u2022 dependence on borrowing increases<\/p>\n
However, the following are not presented:<\/p>\n
\u2022\ta plan to streamline spending<\/p>\n
\u2022 a plan to reduce operating costs<\/p>\n
\u2022 a plan to increase productivity<\/p>\n
\u2022\ta financial resilience plan<\/p>\n
The Municipality is becoming financially weaker and borrowing more<\/b><\/p>\n
There is one question that remains unanswered.<\/p>\n
Why is such a large new loan being taken out today, at a time when the Municipality\u2019s key financial indicators are deteriorating?<\/p>\n
It is widely accepted that the municipality\u2019s expenses will increase further due to inflationary trends. Let\u2019s look at the data.
From 2023 to 2025:<\/p>\n
\u2022\tthe municipality\u2019s total revenue will decrease from approximately 565 million euros to approximately 489 million euros, representing a decrease of approximately 75.5 million euros, or 13.4%.<\/p>\n
\u2022 Cash reserves will decrease from approximately 47 million euros to approximately 35 million euros, meaning a loss of approximately 12 million euros in liquidity.<\/p>\n
At the same time: operating expenses are increasing, personnel expenses are increasing, and debt service expenses are increasing.<\/p>\n
And most concerning:<\/p>\n
The municipality\u2019s investment expenditures are decreasing from approximately 130 million euros in 2023 to approximately 54 million euros in 2025. A decrease of nearly 59%.<\/p>\n
In other words, revenues are falling, available funds are falling, investments are falling, and expenses are rising. And the administration\u2019s response is to borrow more. This is not a sign of financial strength. It is a sign of the Municipality\u2019s shrinking fiscal flexibility.<\/p>\n
The EIB\u2019s own criteria raise questions<\/b><\/p>\n
The European Investment Bank does not only examine whether a project is useful. It also examines whether the borrower has the ability to repay the loan.<\/p>\n
That is why it examines:<\/p>\n
\u2022 revenue stability<\/p>\n
\u2022 liquidity<\/p>\n
\u2022 collectability<\/p>\n
\u2022\tthe debt-to-income ratio<\/p>\n
\u2022 existing loan obligations<\/p>\n
\u2022 the overall financial picture<\/p>\n
And this raises a reasonable question: When revenues are declining, when cash reserves are dwindling, when collection rates remain at a mere 2.5%, and when the Municipality is seeking a new loan larger than its entire current debt, what exactly is the evidence that this new financial burden is fully compatible with the Municipality\u2019s long-term financial sustainability?<\/p>\n
The new loan is larger than the Municipality\u2019s entire current debt<\/b><\/p>\n
Today, the total outstanding balance of all the City of Athens\u2019 loans amounts to approximately 65 million euros. The administration is requesting a new loan of 75 million euros. That is, a loan larger than the total current debt.<\/p>\n
With a single decision:<\/p>\n
\u2022 the debt goes from 65 million euros to approximately 140 million euros<\/p>\n
\u2022\ttotal borrowing increases by approximately 115%<\/p>\n
\u2022 the city\u2019s debt obligations more than double<\/p>\n
This is the true magnitude of the decision.<\/p>\n
The annual cost of servicing the debt is rising sharply<\/b><\/p>\n
Today, the Municipality pays approximately 10 million euros per year.<\/p>\n
With the new loan, the amount is estimated to reach 16 to 17 million euros.<\/p>\n
More money in installments. Less money for the city.<\/p>\n
Someone will foot the bill<\/b><\/p>\n
When interest rates rise, installments, and obligations, there are only three options: increase revenue, cut spending, or take on new debt.<\/p>\n
We see no plan to increase revenue. We see no plan to cut spending.<\/p>\n
So a simple question arises: Who will foot the bill?<\/p>\n
Because the installments will be paid. The interest will be paid. The question is how and by whom. Either through increases in municipal fees. Or through fewer services. Or through new borrowing. There is no fourth option.<\/p>\n
We do not know the actual total cost<\/b><\/p>\n
We are not just voting on 75 million euros.<\/p>\n
We are voting on:<\/p>\n
\u2022 interest<\/p>\n
\u2022 financial charges<\/p>\n
\u2022\tguarantee costs<\/p>\n
\u2022 total repayment by 2046<\/p>\n
What is the final cost the city will pay?<\/p>\n
Future administrations will pay for today\u2019s decisions<\/b><\/p>\n
The loan runs until 2046.The current administration won\u2019t be here when it expires.<\/p>\n
Future administrations will pay for today\u2019s decisions.<\/p>\n
The longer the time commitment, the greater the accountability must be.<\/p>\n
The Municipality has a serious collection problem<\/p>\n
The Municipality\u2019s total receivables amount to approximately 513.8 million euros. Of these, 391.5 million euros are classified as uncollectible or slow-moving.<\/p>\n
In 2024, receivables amounted to 439.5 million euros, and actual collections were approximately 11 million euros.<\/p>\n
That is, a collection rate of approximately 2.5%.<\/p>\n
The new loan is nearly seven times larger than what the Municipality collects each year<\/b><\/p>\n
Annual collections from old debts are approximately 10\u201311 million euros. The new loan is 75 million euros. Almost seven times larger.<\/p>\n
Where is the plan to increase collectability?<\/p>\n
The certified auditor warns<\/b><\/p>\n
The auditor points out a potential additional impairment of approximately 191.5 million euros. An amount more than double the new loan.<\/p>\n
If the more conservative estimate is confirmed, the Municipality\u2019s net receivables will decrease dramatically. The balance sheet picture deteriorates significantly. This is not a political opinion. It is a warning from the certified auditor.<\/p>\n
There are already 14 million euros in European funds for schools<\/b><\/p>\n
The OCE \u201cAthens 2030\u201d already allocates approximately 14 million euros for school infrastructure.<\/p>\n
This project was already mature, already eligible, and already funded.<\/p>\n
Why wasn\u2019t the remaining funding gap covered by other European sources?<\/p>\n
It was not proven that all alternatives had been exhausted<\/b><\/p>\n
There is the Modernisation Fund. There are European grants as well as blended finance schemes.<\/p>\n
Where is the comparative assessment? Why is a loan the first solution?<\/p>\n
There is no comprehensive business plan<\/b><\/p>\n
The EIB requires a business plan. Where is it? <\/p>\n
How much energy will be saved? How much will bills be reduced? How much will emissions be reduced? What is the payback period? What is the financial return?<\/p>\n
Good intentions are not enough. Documentation is required.<\/p>\n
We do not know why the first disbursement of 22.5 million euros is needed immediately<\/b><\/p>\n
Which projects are ready today? Which ones are being put out to tender immediately? Which ones justify the disbursement of 30% of the loan? If there are ready projects, let\u2019s see them. If there aren\u2019t any, why is immediate disbursement necessary?<\/p>\n
Is immediate liquidity required? Is there a problem that you aren\u2019t telling us about, even though we\u2019ve been pointing it out for a very long time?<\/p>\n
The debt is growing faster than the municipality\u2019s financial resilience<\/b><\/p>\n
Data on borrowing trends show that the previous municipal administration pursued a policy of gradually reducing debt, while simultaneously securing over 500 million euros in funding from European and national sources.<\/p>\n
The total loan balance fell from \u20ac100.5 million in 2019 to \u20ac87.6 million in 2023, a decrease of approximately \u20ac13 million. <\/p>\n
At the same time, the repayment plan that had already been set in motion projected a reduction in municipal debt of more than \u20ac40 million by 2031. Based on the repayment data, the outstanding loan balance would drop from approximately \u20ac65 million today to approximately \u20ac24 million in 2031, a reduction of more than 60%. <\/p>\n
The new Doukas loan undermines the municipality\u2019s financial consolidation and puts the city at risk. <\/p>\n
Athens needs a plan, not a blank check<\/b><\/p>\n
Schools need investment. That is not in dispute.<\/p>\n
What is in dispute is whether the right answer is a mammoth loan without full documentation.<\/p>\n
Municipalities are not driven to the rocks by a single decision.<\/p>\n
They are driven to the rocks when revenues decline, cash reserves decline, investments decline, expenses rise, and the administration\u2019s response is more borrowing.<\/p>\n
If we continue like this, the City of Athens is headed for the rocks.<\/b><\/p>\n
And then Athens risks being placed under fiscal supervision, which would be akin to a memorandum for local government.<\/p>\n
Athens needs a plan. Not blind borrowing.<\/p>\n
Mr. Doukas is replacing the search for funding with borrowing. <\/p>\n
The previous municipal administration secured resources for Athens. The current one is leaving Athens in debt.<\/p>\n","protected":false},"excerpt":{"rendered":"
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