A recently released think tank report warns that the real debt of regional capitals in Poland could be much higher than officially reported.

The report, which was drawn up by the Krakow based Kosciuszko Institute, reveals that the debt rung up by Poland’s major cities could amount to 19.7 billion zloty (4.9 billion euro) by the end of 2011.

However, the actual debt, when combining the arrears incurred by dependent companies which are part-owned by self-governing bodies, could reach as much as 27.4 billion zloty, the report reveals.

The Kosciuszko Institute report analysed the economic figures of 140 entities out of around 280 linked to local governments across the country, with the remainder of the bodies not obliged to publish such data.

Thanks to such a loophole, cities can often conceal their real debt, or deficit, Monday’s Rzeczpospolita daily reports, adding that entities linked to the Warsaw regional government alone have amassed debts of up to 1.9 billion zloty.

The cities of Poznan, Szczecin, and Bydgoszcz have the highest amount of ‘hidden’ debt, with actual arrears higher by 85, 84 and 74 percent respectively.

However, the southern city of Krakow was found to have the highest debts. While the official budget deficit of the city is expected to amount to 20.3 million zloty in 2011, the actual debt incurred by its dependent companies may actually be thirteen times higher, the report states. (jb)