The vast majority of external debt for the region’s councils has been borrowed from the Local Government Funding Agency (LGFA).
Money borrowed from the LGFA includes interest payments, similar to borrowing from a bank, although the LGFA has lower interest rates in comparison.
An explainer of external, internal and gross debt is included below.
Hastings District Council – $454m external debt (up from $413m in late 2024)
Hastings District Council, which now exceeds $450m in external debt, has had a rough decade in terms of borrowing money to respond to disasters.
The Hastings District covers an enormous area and was the region hit hardest by Cyclone Gabrielle in February 2023.
The council is still repairing roads, bridges and infrastructure, and was also hit the hardest financially by Category 3 house buyouts in Hawke’s Bay.
Prior to the cyclone, Hastings was already well over $200m in debt, with a large part of that related to the 2016 Havelock North water contamination disaster, which led to significant upgrades to the district’s water infrastructure.
As for the roughly $40m increase in external debt during the past year, a Hastings District Council spokeswoman said that money had gone towards “cyclone response projects”.
“Current debt remains below projected Long-Term Plan levels and well within LGFA borrowing limits [of 280% of a council’s annual revenue],” a council spokeswoman said.
The council’s Long-Term Plan suggests the council could reach $700m in debt by 2030, although it is currently below those projections.
The council increased rates by an average of 15% in 2025 and by 19% in 2024.
It only has $3m in internal debt.
Hawke’s Bay Regional Council – $117m external debt (up from $108m in late 2024)
Hawke’s Bay Regional Council’s external debt increased to $117m as at December 1, a rise of about $9m over the past year.
A Hawke’s Bay Regional Council (HBRC) spokeswoman said increased debt went towards flood mitigation projects.
“Part of this will be repaid by the Crown,” she said.
She said the council was not concerned by its debt position, which was well within borrowing limits.
Positively, HBRC had over $16m in internal debt in late 2024, but now has no internal debt, according to the council.
HBRC increased rates by 9.9% on average in 2025 and by 19.9% in 2024.
Napier City Council – $110m external debt (up from $40m in late 2024)
Napier City Council saw the biggest rise in its debt position over the past year, rising by about $70m.
As at December 1, the council had external debt of about $110m, up from $40m a year prior.
Remarkably, Napier City Council boasted no external debt only a few years ago, in 2022.
A council spokeswoman said its increased debt over the past year was due to “cashflow management of non-general, rates-funded capital expenditure”.
Napier City Council has previously stated under-investment in assets has put pressure on the council to play “catch-up”, including investing in water infrastructure. The council was also impacted by Cyclone Gabrielle.
It has the most internal debt of any council in the region, which was slightly over $100m at mid-2025.
The council increased rates by 8.9% on average in 2025 and by 19.95% in 2024.
Central Hawke’s Bay District Council – $47m external debt (down from $48m in late 2024)
Central Hawke’s Bay District Council managed to slightly reduce its external debt over the past year – from $48m to $47m.
Outgoing CHBDC chief executive Doug Tate said the council “proactively takes advice from independent treasury advisors to ensure we are prudently and responsibly managing our debt position”.
Central Hawke’s Bay District Council increased rates by 7.4% on average in 2025 and by 20% in 2024.
“An ongoing challenge for council and community is balancing building and renewing infrastructure in core work areas while maintaining affordable rates,” Tate said.
The council has internal debt of $13m and gross debt of $60m.
Wairoa District Council – $10m external debt (down from $11m in late 2024)
Wairoa District Council had $9.6m in external debt as at December 1, down from about $11m a year prior.
Wairoa District Council and Central Hawke’s Bay District Council were the only councils in the region to buck the trend and reduce their external debt.
Wairoa had internal debt of $22.2m as at mid-2025.
It increased rates by 5.2% on average in 2025 and by 19.5% in 2024.
External versus internal debt
External debt is money borrowed from outside an organisation, such as from a bank or a lending agency (like the LGFA).
External debt includes interest repayments, similar to a mortgage.
Internal debt means rather than borrowing money from a bank or a lending agency (and paying high interest rates), a council reshuffles existing funds put aside for future projects or in reserve and borrows from itself.
That process is known as internal borrowing.
Gross debt is simply external debt and internal debt added together.