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Algarve Câmaras strangled by debt

By INÊS LOPES – [email protected]

Algarve câmaras’ total debt at the end of 2011 amounted to €651 million, with three municipalities alone responsible for half of that figure.

Topping the list was Portimão with a debt of €163.2 million, followed by Loulé (€95.1 million) and Vila Real de Santo António (€75.9 million), according to Correio da Manhã newspaper.

Alcoutim reported the healthiest finances, with the municipality ending the year of 2011 with no debts and a positive balance of more than €1 million.

As the Algarve Resident reported last week, Fernando Ruas, President of the National Association of Portuguese Municipalities (ANMP), said he was particularly concerned about the short term debt of municipal câmaras in Portugal, which he said amounted to €1.5 billion euros. In the Algarve, municipal short term debt represented 57% of the total debt at the end of 2011.

Property tax receipts down

According to data from the Algarve Câmaras Association (AMAL), municipalities in the region have lost around €300 million in income from property transfer tax (IMT) in the last four years, resulting from the crisis in the real estate market, which is pointed as the main reason for their indebtedness.

Three traditional property hotspots, Loulé, Albufeira and Lagos, have all seen a significant decrease in IMT receipts, -€85.2 million euros, -€55.7 million and -€35.8 million respectively since 2008. And the tendency is expected to continue in 2012 as the first four months of the year have already registered an average decrease of 29% in IMT, or -€6.5 million, when compared to the previous year.

AMAL has already called on the government to take stock of the câmaras’ financial situation, while describing the Algarve economic reality as worse than the rest of Portugal.

The câmaras association has further requested that exception is taken with the Algarve situation as it needs to ensure infrastructures are in place to meet tourist demand. It believes it is vital that any remaining EU funds are made available for the region and that an urgent solution is found for the câmaras’ dramatic debt.

Meanwhile, an announcement made by the government informing municipalities that it would be withholding 5% of municipal property tax (IMI) due for 2011 and 2012, to help generate income for the State’s coffers after expenses with urban property re-evaluation, has led some câmaras to want to contest the matter in court as they say the measure will cost them €120 million.

Accusing the government of “abuse of power”, the National Association of Municipalities (ANMP) has said that the current 2.5% that the State withholds seems “fair” but 5% represents “a violation of the local government”.

Portimão Mayor Manuel da Luz describes the government’s decision as “illegal appropriation of municipal receipts”. “The measure is not only illegal but unconstitutional,” he said, adding that his Câmara could lose around €900,000 in IMI receipts.

Macário Correia, President of AMAL, said Algarve Câmaras are facing serious financial difficulties and have been unable to access credit for more than one year. “Each câmara has to fight this latest government decision individually and I think most câmaras will go ahead with legal action,” he said, adding that Faro Câmara, for which he is mayor, would move forward with an injunction this week.