Amsterdam financial reserves drained by year’s end over pandemic
The coronavirus crisis will just about drain Amsterdam's financial reserves by the end of this year, finance alderman Victor Everhardt said in the Spring Letter for 2020. The financial consequences of the pandemic in Amsterdam are expected to amount to 260 million euros this year. "Should the deficit amount to the estimate, this means that the General Reserve position is expected to be around zero at the end of 2020," he said.
That means that Amsterdam will no longer have an emergency buffer to absorb unforeseen risks or shortages in the coming years. "This is a unique situation, normally we have a reserve for what we lack, it is now gone and that is very serious," the finance alderman said. The coronavirus especially hit Amsterdam in missed income from tourism and parking taxes, among other things. Dividends from companies in which Amsterdam has shares, like Schiphol and RAI, will also be much lower this year.
According to the municipality's internal rules, Amsterdam's reserve must be at least 200 million euros. It may take a long time to build up that buffer again.
An additional problem is that Amsterdam can only borrow money to finance investments in the city, Everhardt said. Filling financial gaps must happen from the city's own money. Two weeks ago the State announced that it is allocating over 500 million euros to municipalities, provinces and water boards, to compensate some of the lost income. "This was a first step, but it does not yet approach the total loss we expect this year,certainly not. It is very nice, but far too little if it stays at that," Everhardt said. This means that the city council will have to make some painful choices in the coming period.
These decisions are usually announced in the Spring Letter - an overview with which the municipality gives insight into the state of its finances for the year. But given the exceptional circumstances, the decisions were postponed until autumn so that the municipal accountants have more time to get a good picture of exactly what the consequences of the coronavirus pandemic will be.