Portimão Câmara has Portugal’s worst debt

Portimão municipal authority’s debt increased by €10 million to a total of €169 million in 2012, which amounts to the worst in Portugal, according to the directorate of local authorities (Direção-Geral das Autarquias Locais – DGAL).

On average, there are delays of three-and-a-half years to settle suppliers’ bills and meet bank debts, said a report in Correio da Manhã.

The municipality, however, claims that payments for services are being made within a 12-month period and the DGAL appraisal presents a misleading picture by including loans from the bank in its reckoning.

Apart from money owed to suppliers, a serious financial situation has affected the authority’s stability. The council tax on properties (IMI), for example, was hiked to a maximum this year and water rates are the highest in the Algarve and set to rise again this year.

Manuel da Luz, President of the Authority, told Correio da Manhã that he recognises that the financial situation is “complicated” and depends heavily on a government loan of €100 million plus a bank loan of €39 million to balance the books.

He stated that radical reductions in spending and borrowing had to be carried out and it may also be necessary to make “drastic decisions” relating to the authority’s workforce.

In 2011, the authority’s debt was €159 million, of which €112 million was owed to the bank. By November 2012, the debt was €169 million with a bank debt of €109 million.

Meanwhile, Paulo Pacheco, president of the Portimão Retailers Association, said the câmara’s dire finances were having a negative impact on businesses as municipal rates and licences have increased to help the authority meet its financial obligations.

He said: “Several companies have closed down as they cannot support the costs of running the business. The past two years have been tragic for the economy. More and more businesses and people are leaving the Portimão city centre.”