How does retail become heavily indebted
In the corona year 2020, Munich got away financially "with a black eye". With these words, treasurer Christoph Frey (SPD) commented on the city's provisional annual financial statements, which he presented to the public on Monday. But Frey was only able to draw such a balance because the federal government poured in generously with money. With 669 million euros, he made up for the hole in the trade tax caused by the corona crisis, so that Frey was able to post 2.4 billion euros in the city's most important revenue item. Since the presentations also had to save, the city ultimately even generated a surplus of 33 million euros in its ongoing business in administration.
If, on the other hand, you look at the newly borrowed debt, then a black eye is no longer enough. Since the liquid reserves have been used up, the city had to borrow money for a large part of its 1.6 billion euro investments. The current debt level is now 1.543 billion euros in one fell swoop. Munich has not had so many liabilities since 2005. This does not come as a surprise and is not solely due to the financial crisis that was triggered by the pandemic. The high investments that have already been made, for example in schools and daycare centers, are now having a full impact and would not have been able to be paid for in better financial times without outside capital.
The people of Munich will not really feel the corona crisis until 2021, but according to the finance department, for several years. "In the following years the budget remains in high deficit," it said in a statement. Frey warns of hard times and calls for massive help from the federal and state governments. Without compensation for the trade tax losses "at least in 2021 and 2022", Munich could "hardly cope with its financial task".
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