Maurice Vincent: Putting our finances on a sound and secure footing and preparing for the end of the crisis
Speaking in the debate on the consequences for local authorities of the international financial crisis, the Mayor of Saint Etienne, Maurice Vincent, called on the latter to re-assess and renegotiate if necessary their bank loans, and to prepare now for the future and for the end of the crisis by investing in sustainable development and innovation.
Interview – 04.03.2009
Question: While the extent of the current crisis is interpreted at times in dramatic terms and at others in reassuring terms, including with regard to the financing of local authorities, what is your analysis and what is your advice to local elected representatives to deal with the situation?
Maurice Vincent: We have to stop saying that banks are no longer granting loans. The fact is that they have multiplied their margins five or even ten-fold, which reduces the effects of lower interest rates. They know that local authorities are credible and solvent clients, so there is still money on the market. In contrast, I would call on mayors whose municipalities have contracted variable rate loans, the notorious “toxic” loans, to renegotiate them with the banks, as they could turn out to be time bombs, not in the immediate future, but around 2020 or 2040. In Saint Etienne for example, we are trying to bring down our total proportion of “risky” borrowings from 65% to 20% of our debts by 2014, even if this means initially paying a little more interest. However, this policy is essential for long-term security.
Question: These financial negotiations, essential though they may be, are perhaps not quite so easy for ordinary citizens. What can they expect in the months and years to come?
Maurice Vincent: If economic activity falls, then both local and national tax revenue will also fall. I am concerned that states, more in debt than municipalities, will pass on new charges to them, with the end result that local taxes will inevitably rise or that we will have larger debts. At the same time, a reduction in activity means higher unemployment and more social welfare expenditure which must also be financed. In addition, there will be widespread unease and exasperation among our citizens who are the victims of a situation for which they are not responsible.
Question: What can local authorities do to prepare for the end of the crisis and support the economy?
Maurice Vincent: I think that the key for the future lies in investment, especially in sustainable development. In Saint Etienne, we will be investing 210 million euros to renovate certain neighbourhoods and reduce energy consumption in public buildings, in particular schools. We also have new projects for science and technology parks, which are the source of jobs and employment in the long term.