As many as 42 seriously indebted councils are now going to see their monthly pay packets from the government docked.
Instead of government money going into their coffers, the money will go towards paying long-suffering suppliers, many of which face bankruptcy waiting for overdue payments.
Announcing the plan last week, Secretary of State António Leitão Amaro explained at issue were combined debts of over €21 million.
In cases where local authorities have failed to reduce their debts to suppliers by 10% – or in cases where debts have increased – the government is now going to act tough.
“It’s supervision-at-work,” he explained in an interview with Correio da Manhã. “If we didn’t apply these sanctions, councils would start thinking they could fail to reduce their debts without consequences.
“In the long term, councils will be better off” with this measure, he added, as they are paying interest on their debts, and if these are forcibly reduced, local authorities will have less money to shell out.
But of the country’s leading bad payers, only 27 are financially strong enough to be penalised this way.
Councils like Setúbal (owing over €4.4 million) and Paços de Ferreira (€1.8 million) are all being given time to organise alternative FAM funding, or present their objections.
The reason for giving ‘time’, explained Leitão Amado, is that sanctions could put the council’s salaries at risk.
Of the 27 Câmaras facing immediate sanctions, only one is in the Algarve (Lagos: owing €80,132) and no mention at all was made of financially-strapped Portimão which at last count owed over €159,000 million in total and at the beginning of 2014 was reported to be taking over two years to pay its suppliers.
