“If we were a company we would call it insolvency”. This was stated by Fernando Ruas, president of the national association of Portuguese Municipalities, regarding the state of the accounts of the Portuguese municipalities. “If the Government does not intervene, some municipalities will have to restructure their debt“, added the authority. The fault for this condition of local shortage, according to Ruas, would derive from the strong cuts in public spending that Lisbon is implementing to satisfy the requests of the Troika (EU, ECB and IMF) and thus obtain the further tranche of the plan from 78 billion euros. According to data from the association of him, Ruas told Bloomberg that the total debt of all the municipalities would reach 9 billion euros.
Among the most indebted municipalities stands out theisland of Madeira, whose deficit in 2011 reached the record of 6,3 billion euros. Portugal's economic situation certainly does not bode well for an improvement. The country's gross domestic product decreased for the fifth consecutive quarter, marking -2011% in December 1,3. Unemployment is at 14%. Data that make it even more difficult to achieve the target of a deficit/GDP ratio of 4,5% this year and 3% in 2013.
Lisbon is expected to discuss these issues with individual municipalities in the coming weeks. “Nobody expects the Executive to cancel our debts”, Ruas said, "I am confident that the Government will find a solution that will help municipalities meet their commitments by paying suppliers on time and honoring their debts."
The alarm on the excessive debt of the Portuguese municipalities was sounded on Monday by Minister of Parliamentary Affairs, Miguel Relvas: "The debt of the municipalities, considering the complex of municipalities and local businesses, is around 12 billion euros. The short-term debt, which is being evaluated, will not be less than 3 billion. We are talking about very high numbers”.
