Faro council is to ask the government if it may pay off its long-term government loan earlier than planned.
The €16 million loan, organised under the government’s plan to support local councils, could be paid off this year and would be replaced by a new loan on better commercial terms.
The idea is to take out a bank loan of about €13 million at more favourable terms and to lose the more expensive government loan which comes with some rather unattractive terms and conditions.
Faro Mayor Rogério Bacalhau aims to ‘regain independence’ and, importantly, the refinancing would remove the government condition that the council charges the maximum permissible rates bills (IMI) to Faro’s property owners.
At the moment the idea is in the planning stage but the figures add up and the deal will save wasting money on high interest payments.
Bacalhau said to Sul Informação today that the 2016 year end accounts will show that debts to suppliers are way down and all are being paid within 90 days.
When the accounts show stability and fiscal rigour, the council will apply to the government to repay the current loan and will seek the best deal from one or more of the high street banks.
On a radio interview being broadcast this evening on RuaFM, Bacalhau admits the government loan is at a spread of about 2.9% and that there are much cheaper loans available.
