Municipalities in better financial health, but still allergic to debt

© CP / Radio1

The French Development Agency presented its Municipal Observatory, the financial report of the 2014-2020 mandate this Wednesday. Municipalities generally appear to be in better financial health than at the end of their previous term. But the financial contributions from the state and the country remain predominant, the municipalities remain well below their possibilities of indebtedness while the structuring projects are long overdue.

“AFD’s mandate in Polynesia is to support public policies and economic development”, says its new director, Mounia Ait Ofkir. As such, the French Development Agency publishes an observatory of the municipalities of French Polynesia after each municipal mandate. The one relating to the three-year period 2014-2020 was presented this Wednesday, in the presence of several Tavana, in particular Tony Géros, Simplicio Lissant and Damas Teuira.

The financial health of Polynesian municipalities, constantly improving since 2014, remains good: from 2008 to 2014 they drew from their reserves, the 2014-2022 mandate allowed them to replenish their savings: it doubled and reached 20, 25 billion XPF, “Which gives cash flow in terms of future investments”at least for the most important municipalities, says Mounia Ait Ofkir.

The volume of investments increases from 45 to 60 billion XPF from one term to the next. It is based 79% on subsidies from the country and the state. Recourse to debt by municipalities remains very marginal: 16.6% against 80% in mainland France and overseas departments.

Even in operation there is a low financial autonomy, illustrated by a figure: 63% of municipalities’ actual operating revenue comes from grants, with a 15% increase between the 2008-2014 and 2014-2020 mandates. Maintenance and maintenance costs are growing “particularly rapidly: 7% per year”, underlines the report which brings two explanations: a desire to maintain more municipal buildings, but also end-of-cycle infrastructures whose maintenance is more expensive.

The Municipal Observatory published by AFD identifies the challenges facing municipalities, and they are always the same from one relationship to another: municipalities will have to “play a decisive role in the water and energy sector”, “continue their investment efforts to address user needs and CGCT obligations “which have been postponed to 2024, and” make financial information more reliable for better strategic and financial management “, a way of saying that municipalities need to keep better accounts and that are encouraged to take advantage of AFD’s advisory function in financial engineering.

The French Development Agency

Mounia Ait Ofkir, new director of the French Development Agency in Polynesia. © CP / Radio1

AFD is one of the state’s public banking organizations that finances, or co-finances with local banks, long-term public sector investments, whether in the country, municipalities or public businesses, at subsidized rates.

But AFD also co-finances private projects “job generators, despite being in our strategic indicators which are adaptation to climate change and the strengthening of social ties”says its manager. Sogefom, a wholly-owned subsidiary of AFD, is a guarantee fund that allows VSEs in French Pacific communities to obtain bank loans. 319 Polynesian VSEs were thus supported in 2021. The French Development Agency is also a 35% shareholder of Socredo: Mounia Ait Ofkir and her deputy Kevin Cariou are directors of Socredo, where they are particularly responsible for validating the “development” strategy sustainable ”of the bank in uru.

AFD also manages the Overseas Fund on behalf of the ministry of the same name. Its action consists in providing assistance to the project management for the study and implementation of structural projects selected under the Overseas Blue Book and the Recovery Plan.

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