Slower growth for net worth of municipalities

28/06/2005 14:00

Net worth of Dutch municipalities increased by 3.7 percent in 2003 to 25.3 billion euro. Although the increase in net worth is larger than the rate of inflation, it has been moderate in recent years.
In the period 1995-2003 the net worth of municipalities (12.1 billion euro in 1995) more than doubled with a growth rate of 10 percent per year. The increase was largest in the second half of the nineties, peaking in 2000 with a 24 percent rise. Since then it has stagnated.

Increase in net worth of municipalities

Increase in net worth of municipalities

Book profits from share sales

In the last few years municipalities have sold their shares in energy companies and the property development, finance and management company Bouwfonds. These sales, to banks and other energy companies, generated hefty book profits.
In 2003 the cashed shares accounted for more than 90 percent of the increase in net worth. In 2000 share sales generated 2.3 billion euro, which accounted for nearly 55 percent of growth in net worth of municipalities. In addition, net worth was pushed up by higher profits from sales of land. Land sales have diminished more recently, however, because of the economic decline. Net operating results also affect net worth.

Increase in net worth of municipalities

Increase in net worth of municipalities

A large number of municipalities in the province of Utrecht made a book profit of nearly 0.5 billion euro in 2003 by selling their shares in energy company Remu to Eneco. A number of municipalities in South-Holland made a book profit of nearly 0.3 billion euro by selling their shares in Transportnet Zuid-Holland (TZH) to TenneT and the finalisation of earlier sales of shares in Elektriciteitsproductiebedrijf Zuid-Holland (EZH).

Solvency of municipalities by population

Solvency of municipalities by population

Solvency stabilising

The capacity of municipalities to meet long-term obligations improved in the period 1995-2000. The solvency ratio of all municipalities rose by no less than 14 percent points to 34 percent of the balance sheet total. Since then it has only risen by 1 percent point, to 35 percent.
In the period 2000-2003 the ratio for the largest municipalities (more than 150 thousand inhabitants) increased by nearly 5 percent. For the medium-sized municipalities (between 50 and 150 thousand inhabitants) it rose only slightly (by just over 1 percent), and for the smallest municipalities (fewer than 50 thousand inhabitants) it deteriorated slightly. The large municipalities therefore benefited most from share sales. Moreover, the net worth of large municipalities is pushed up by profits from land sales.

Lia Siebeling