Cash-strapped mayoress reveals “Plan B”

Cash-strapped mayoress reveals “Plan B”

Portimão is currently experiencing one of the most difficult financial situations in its history. With a whopping €160 million debt and a recently-rejected government loan, things could hardly look worse for PS mayoress Isilda Gomes.
Nonetheless, she found time to meet with regional newspaper Barlavento and discuss the municipality’s horrendous financial pickle, which involves the rejection of PAEL loan money, the worst council debt load in the country, the winding up of the infamous Portimão Urbis company, the financial audit of the former PS administration, and much much more.
Starting with the good news, the mayoress revealed that an emergency mechanism is in place to ensure funding through the municipal support fund FAM (Fundo de Apoio Municipal).
It will serve to ‘replace’ the council’s bid for €89 million worth of PAEL funding, rejected just over a week ago by the Court of Auditors.
“We will have a solution to all this very soon,” she said. “The Minister of Finance herself told me last week that the government would be front-loading FAM funds to Portimão (attributing the funds in advance.”
Officials even told the mayoress that FAM funding would be approved at the government’s next Council of Ministers, and that a meeting to discuss the programme in Parliament has already been scheduled for June 16.
Speaking of the PAEL rejection, Gomes admitted that she was never very hopeful about securing the loan money.
“We always knew that the Court of Auditors’ opinion on factoring transactions was different from the commission’s that approved the PAEL funding for Portimão on behalf of the government. While the government classified it as an administrative/commercial debt, the court considers it a financial debt and thus not applicable under the PAEL.”
And while other municipalities saw their PAEL candidatures approved even with factoring transactions – in simple terms, when accounts receivable are sold to a third-party at a discount to raise capital – the mayoress stressed the cases cannot be compared.
“In Portimão, €80 million of the €89 million from the PAEL programme was to settle factoring transactions. If they were removed from the programme, it would no longer make sense.”
Once FAM funding is approved and the funds transferred to the municipality’s accounts, the next step will be to restructure short-term debt.
Says Gomes, the move would allow the administration to pay off its creditors and ensure the council is able to finance “essential” areas such as “civil protection, social assistance and the maintenance of public spaces and municipal infra-structures”.

No layoffs

Despite the council’s financial ‘hell’, Gomes guaranteed there will be no mass layoffs.
She agreed that the council could implement a plan to terminate contracts through mutual agreement – but only if the workers wanted this.
The mayoress revealed “it is no easy task trying to motivate council workers through these tough times”, especially as they all run the risk of not getting paid.
Speaking of the audit of the town council’s previous PS administration (which ran from 2009-2013), the mayoress said she hoped it would establish what went wrong to cause the borough’s financial turmoil.
According to Gomes, if any foul-play or wrong-doing is detected, the findings will be investigated by the Prosecutor General’s Office.

Portimão Urbis – a scapegoat, says mayoress

Many have blamed municipal company Portimão Urbis for a large part of the municipal debt, but according to Gomes, it is not the monster everyone makes it out to be.
“Portimão Urbis has been the scapegoat for all that went wrong in the past. What the company’s accounts show us is that it was used to take on the debt that the municipality could not bear due to its debt limit”.
The mayoress explained that some municipal duties were transferred over to Urbis without the “necessary funds”, thus leading to its downfall. Urbis’ debt amounts to €46 million.
She revealed that Urbis has since undergone a restructuring process – 19 contracts were ended by mutual agreement and working schedules and salaries have been pared – and were it not for its suffocating debt, it would today be a “completely sustainable” company.
However, the mayoress refused to be drawn on what would happen to the company now.
She confirmed only that a study was carried out by municipal specialists to evaluate the pros and cons of each decision.
“There are many scenarios on the table that should be pondered and discussed rationally, although I know that if I decided to close Urbis most Portimão residents would applaud.”

|| Arade bridge event a ‘no go’

Gomes also spoke of the much-rumoured event that would close down the Arade Bridge between Portimão and Lagoa for 22 days in October, and confirmed that the last she heard the event had been moved to Valencia, Spain.
The project had been presented by a German car brand to the national road authority Estradas de Portugal (EP) and involved using the bridge as a setting for multiple dinners, making it impassable for traffic. Locals were quick to speak out against the plan.
“We were told it would have generated around 1,200 sleepovers and the presence of 1,000 journalists, which could have had a very positive effect on the economy.”
Thus the mayoress is upset that the idea was rejected.
“A tourism region cannot afford to not even consider this kind of event. I think that all parties involved should have at least considered the potential and the impact of this event for the Algarve without giving in to populism.”
Still, Isilda Gomes acknowledged that the event could not have been organised on the Arade Bridge without some kind of compensation for the affected locations.
“For me, it seemed like in order to even assess the project part of the profit would have had to go to the affected municipalities. There would have had to have been an understanding between all three entities involved (Estradas de Portugal and the two councils).”
According to Gomes, her council had already reached an agreement with Estradas de Portugal to use €300,000 of any profits to carry out rehabilitation work on access routes to the bridge.
But as both things stand now, it looks like the event will not be taking place in the Algarve after all.
Article written from an interview conducted by journalist Hélder Nunes from regional weekly newspaper Barlavento, now part of the Open Media group.