Izmir Metropolitan Municipality, within public institutions in Turkey, "the lowest interest rate and the appropriate term" has made one of the external debt.
Kemal Kılıçdaroğlu, President of the Republican People's Party (CHP), at the Groundbreaking Ceremony of the Çiğli Tramway he attended on Saturday, February 6, heralded that the loan agreements of the Üçyol-Buca Metro Line Project were approved and the project will begin soon. Kılıçdaroğlu emphasized that İzmir Metropolitan Municipality made foreign borrowing with more favorable interest and maturity conditions than the Ministry of Treasury and Finance; that, in foreign markets, according to the Treasury and the Ministry of Finance of the Republic of Turkey stated that it is an indicator of the council's credibility.
Upon the news and comments in the press after the ceremony, İzmir Metropolitan Municipality was the subject of the statement made by the Ministry of Treasury and Finance, it was necessary to make the following statement.
Üçyol-Buca HRS Line project belonging to İzmir Metropolitan Municipality was included in the Investment Program Revision Schedule, which was approved with the Presidential Approval dated 10.07.2019 and numbered 24776198-903.02-48. The related project is also included in the 2020 annual investment program.
The total project amount of the Üçyol-Buca HRS Line Project, which is included in the 2021 Investment Program with the project number 2019E06-135625, is 9.684.217.400,00 TL - (1.140.446.723,82 Euro, determined at 05.02.2021 on 15.30. the indicative Euro selling rate is 1 Euro: 8,4916 TL), and the total foreign loan amount is 8.447.107.120,00 TL - (994.760.365,53 Euro).
An authorization letter of 06.12.2019 million Euros was signed with the European Bank for Reconstruction and Development (EBRD) on 80 without a Treasury guarantee for the project in question, and as a result of the negotiations, the EBRD financing support was increased to 125 million Euros.
Within the scope of the related project, AIIB (Asian Infrastructure Investment Bank) has made a commitment to provide external financing of 125 Million Euros, AFD (French Development Agency) 125 Million Euros and BSTDB (Black Sea Trade and Development Bank) 115 million Euros, and authorization letters are signed with the relevant institutions. stage has been reached.
Within the scope of the EBRD letter of authorization, the interest rate of the project financing is 6-month EURIBOR + 3.20 percent and the maturity is determined as 4 years, including a 12-year principal grace period. In discussions with other financing institutions, the interest rate and maturity are expected to be similar to the EBRD indicators.
The Üçyol-Buca HRS Line Project Tender Announcement, which will be open to the whole world within the scope of the European Union procurement policies and procedures, is of great importance for the project to start as soon as possible. Accordingly, the tender notice will be published on the EBRD website on February 15, 2021 within the scope of the Üçyol-Buca HRS Line Project. Until the tender process is finalized (approximately 7 months), it is planned to sign an external financing agreement with the above-mentioned creditor institutions.
The use of credits will be made on a progress payment basis in parallel with the progress of the construction works. The return to the investor of the Ministry of Treasury and Finance's Eurobond with a 20.01.2021-year maturity of 10 billion dollars on 1.75; It is seen that the return of Eurobond with a five-year maturity of 5.95 billion dollars to the investor is 1.75 percent. The return of the Ministry of Treasury and Finance to the investor of the Eurobond of 4.90 billion dollars with a maturity of 25.11.2020 January 15 on 2031 was 2.25 percent.
In order for municipalities to provide external financing, the relevant project must first be included in the annual investment program by the Presidency Strategy and Budget Directorate, and the Ministry of Treasury and Finance must give an appropriate opinion within the scope of external borrowing. Only infrastructure projects can form the subject of the borrowing that can be taken into the relevant investment program.
Our municipality cannot legally provide external financing outside the scope of the project loan. The comparison of term project financing costs until 2033 with issue loans is indicative. The only goal of our municipality when borrowing is to provide the most favorable interest and long-term project financing in line with the public interest.
Treasury and Public Debt Management Report issued by the Ministry of Finance, in 2020 in Turkey İzmir Metropolitan Municipality (125 million euros), the General Directorate of İZSU (49.8 million euros), including a total of 174.8 million euros; It is observed that there is no other municipality providing external financing, except for the Istanbul Metropolitan Municipality (580 Million USD and 22.3 million Euros) and Manisa Metropolitan Municipality, which provides a small amount of credit (4.7 million Euros).
The external borrowings of our municipality are not guaranteed by the Treasury, and no guarantee, assignment or surety is given when borrowing. Since 2011, public institutions cannot borrow under the Treasury guarantee, and it is thought that if the Treasury guarantee is given, borrowing can be made at lower costs.
Izmir Metropolitan Municipality will continue to work in harmony with all public institutions for the realization of large investments and projects, taking into account the benefit of the city.