Madeira may need a short-term €3.737 billion financial bailout as it was discovered that the spendthrift autonomous region had a €5 billion black hole in its accounts.
In order to cover some of the debt incurred from big ticket public works and construction projects on the island over the past decade, the Portuguese Inspectorate of Finances has proposed a renegotiation of public-private partnerships on road concessions and the introduction of tolls on the island – something its maverick leader Alberto João Jardim has always refused.
The Finance Institute (IGF) has worked out that the €3.7 billion is the amount Madeira and Porto Santo will need to continue supplying essential day-to-day local administrative, education and health services over the next four years.
However, the true extent of Madeira’s financial problems means that it might need up to €5.8 billion to function between now and 2030.
The shocking state of the island’s finances comes at a time when Portugal is desperately trying to bring its public spending deficit down to levels imposed by the international ‘Troika’ made up of the European Central Bank, International Monetary Fund and European Commission.
The money will be needed to satisfy interest rates on direct and indirect debts incurred by the island’s public administration and public companies, and outstanding bills for white elephant public works projects which have yet to be paid.
Alberto João Jardim has so far remained unrepentant and says he does not regret a single penny spent on improving the lot of the people of his island. The PSD leader of Madeira who has been in power on the island for over 30 years is set to win another election this month.