Government forgives Žilina’s €17.5 million debt

THE GOVERNMENT adopted a resolution at its session held in Žilina on October 8 which forgives the city of Žilina of a debt at €17.5 million it took for building a Korean village in Krasňany. The town failed to sell seven blocks of flats and nine family houses it built in 2006 for managers of the local carmaker Kia. The debt made Žilina the most indebted town in Slovakia.

THE GOVERNMENT adopted a resolution at its session held in Žilina on October 8 which forgives the city of Žilina of a debt at €17.5 million it took for building a Korean village in Krasňany. The town failed to sell seven blocks of flats and nine family houses it built in 2006 for managers of the local carmaker Kia. The debt made Žilina the most indebted town in Slovakia.

Žilina did not have enough money to repay its debt. By adopting the resolution, the city will start cooperation with the Economy and Finance Ministries over transferring the residential area to the hands of state, the SITA newswire reported.

“We want to help Žilina,” Prime Minister Robert Fico said, as quoted by SITA, adding that this shows it is necessary to cooperate and, for the mayor and regional governor, to have connection to the governmental or parliamentary structures. Fico further explained that in this case the Žilina mayor (Igor Choma) is a Smer MP which allowed the government to pass such resolution easier.

According to Choma, thanks to the deduction the town’s debt will fall to 36 percent. In the end of 2010, the debt stood at 140 percent.

“This will free our hands for normal credit policy and as of next year we will be able to communicate with banks in normal way,” Choma said, as quoted by SITA.

Choma said in the past that the town of Žilina has nothing to do with Korean village and that it was only a mediator of the aid for construction of Kia plant in Teplička nad Váhom. The town did not even receive money from the real estate tax since the factory does not stand on its territory.

Because of the threat of the forced administration, Žilina asked for postponing the maturity date by the end of 2014 with the plan to sell the residential area either to the carmaker or to anyone who will be interested. The money from the sale should go directly to the state coffers, as reported by SITA.

Nobody however showed interest in purchasing the site for €14.08 million Žilina was asking for. Kia wanted to buy it for only half of the invested amount, SITA wrote.

Source: SITA

Compiled by Radka Minarechová from press reports

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