Câmaras in heavy debt

PORTUGAL’S CÂMARAS have an accumulated debt of eight billion euros.

Between January and June 2006, câmara debt rose by a further 83 million euros, according to figures released by the Bank of Portugal.

At the end of 2004, the liquid debt owed by the câmaras of Portugal stood at six billion euros. This figure included debts to banks, service and goods suppliers, financial leasing and factoring groups.

At the end of 2005, only the total medium and long term debt owed to banks (not including leasing and factoring contracts) shot up by four billion euros.

The Secretary of State for Local Administration, Eduardo Cabrita, made clear last week that the sale of future credits puts at risk the national objective to bring the government’s administrative and public spending deficit within the 4.6 per cent laid down by the European Union’s Growth and Stability Pact for Portugal in 2006.

Cabrita said that credit sales, while not being illegal at present, would only serve to aggravate câmara debt.

Fernando Ruas, President of the Câmara Association said that the minister’s words were over the top, exaggerated and silly.

It was in November 2004 that the Tribunal de Contas, court of accounts, following its audit of 278 câmaras, warned that the number of câmaras using financial leasing, factoring contracts and borrowing against future credits was on the rise, as well as the volume of monies involved.

It was through this kind of contract that the authorities found a loop hole in the strict borrowing rules imposed by the then PSD government. Between July 1, 2003 and 31 May, 2004, 103 câmaras had entered into complicated finance contracts to the total tune of 31 million euros. In the year prior to this, 118 had drummed up almost 16 million euros in debt.

Reacting to the Secretary of State’s warnings, the President of Cascais Câmara, António Capucho said that borrowing against future credits was a normal, legal management operation.

Those câmaras with debts greater than 100 per cent of income include:

• Lisbon: 362 per cent.

• Porto: 154 per cent.

• Vila Nova de Gaia: 151 per cent.

• Vila do Conde: 145 per cent.

• Loures: 131 per cent.

• Sesimbra: 131 per cent.

• Figueira da Foz: 112 per cent.