Vila Real de Santo António council has issued a forthright rebuttal on a report from the Public Finance Council, released on Wednesday, which placed the municipality among the five municipalities that are close to a financial breakdown.The council says the report is based on the years 2014 to 2016 which "do not reflect, in a real way, the ongoing debt reduction measures" the council has made.
According to the "Budget Execution of Local Administration 2017" report, Vila Real de Santo António council’s debt, for the years between 2014 and 2016, was three times its revenues.
According to the Public Finance Law, the total debt of any municipality must not exceed 1.5 times the average of its revenue in the three previous years.
The report notes 27 municipalities with a total debt "above the ceiling," among which is Portimão, but Vila Real de Santo António is among the five in the country that performed the worst.
As soon as the report was released, the VRSA council, led by Social Democrat, Conceição Cabrita, explained that "a large part of the debt of the municipality is embodied in investment and capital expenditure" and that "in the last 12 years, the autarchy increased its assets from €15 to €200 million."
The council made the following points:
1 - The municipality started to develop a series of financial containment measures several years ago to reduce its debt;
2 - This report is based on data from previous years (2014 to 2016) which do not reflect actual debt reduction measures in the municipality;
3 - The municipality is currently in renegotiations with the bank to reduce interest rates on its loans, situations that other municipalities in a similar situation of Financial Sanitation already have resolved;
4 - Much of the council debt is tied up in investment and capital expenditure;
5 - In the last 12 years, VRSA has increased its assets from €15 to €200 million;
6 - In recent years, €65 million have been invested in new water networks, sewers and rainwater drainage systems, €17 million in education and €20 million in health. Added to these values are another €100 million in basic infrastructure for the county, such as new schools, swimming pools, the mortuary, the rehabilitation of the old EN125 and the Town Hall building;
7 - On a daily basis, the municipality continues to monitor its main sources of current expenditure, seeking special containment of expenses in the areas of fuel and transportation, printing, communications, street lighting, overtime and the purchase of supplies;
8 - These measures are in addition to the council’s Financial Containment Plan, in force for more than five years, which has already saved over €12 million, resulting from the application of a hundred measures across all its divisions and sectors of activity;
9 - This set of actions seeks to regularise the economic and financial situation of the municipality, effectively responding to the crisis situation, which was the main factor responsible for the reduction of municipal revenues in recent years ;
10 - The previous executive left everything to do in the matter of water supply and wastewater, so it was necessary for the council to take on debts of €60 million to solve these problems;
11 - If such amounts had not been spent on construction, the Portuguese State now would be facing several million euros in fines due to non-compliance with environmental regulations and the treatment of effluents;
12 - It is recalled that the council inherited a heavy debt from the previous socialist council, namely: a loan of €7 million related to the construction of social housing; more than 20 court cases that cost the council around €5 million; to which can be added €20 million in invoices that were not paid by the previous socialist controlled council.
