French towns facing 18 bn euros in toxic debt: report
A parliamentary commission will report this month that nearly 2,000 French towns are struggling to repay toxic debts worth 18 billion euros ($24 billion), sources in parliament told AFP on Wednesday.
The report, due on December 15, will reveal the full extent of the exposure of French municipalities to speculative toxic loans, bought at initially very low interest rates but now linked to soaring rates.
The 110-page report will say that local government authorities, including local hospitals and housing agencies, owe a total of 32 billion euros in debt. Of that 22 billion euros is owed by municipal governments, of which 18 billion euros is considered toxic.
The report will say that 1,800 towns of fewer than 10,000 people are having to deal with toxic loans, of which 1,600 were issued by dismantled Franco-Belgian bank Dexia.
Members of the commission will recommend stricter controls on the borrowing of local governments and a government assistance programme to help indebted towns.
The report will come as the French government faces increasing austerity measures to deal with the eurozone debt crisis and maintain its cherished triple-A credit rating.
© 2011 AFP