Finance minister says Vilnius city should not be allowed to issue bonds

“No local government will place bonds of its own in Lithuania while I am in this office, unless the Seimas decides otherwise,” he told lawmakers on Thursday in response to a proposal to allow the city of Vilnius to issue bonds.

Šadžius said that such bonds would pose an additional risk to fiscal sustainability and that the state had to maintain a monopoly on bond issuance.

“Local governments can borrow money in the commercial market and they do,” the minister said.

“As far as I know, Vilnius’ former government took successful steps toward debt refinancing. I do recommend that Vilnius’ new authorities continue going the same way, that is, to convince creditors that this can be done and to restructure debts on the grounds that the municipal finance management is becoming more transparent,” he said.

Vilnius hired financial advisers for an international bond placement back in 2001. It was said at that time that the capital would issue bonds worth 66.6 million euros, but these plans have never materialized. The International Monetary Fund was sceptical about the city’s intentions to issue bonds.

Vilnius’ debt currently stands at around 390 million euros.

Lithuanian legislation does not allow local governments to issue bonds.