Portimão’s companies at risk

The president of the Portimão Retailers Association (ACP) said on Wednesday this week that several companies in the council may close their doors because the Câmara has not been able to pay its debts to suppliers on time.

Speaking to the press, the president of ACP, Paulo Pacheco, said that “the debts of the Câmara are stifling Portimão’s economy, which is already affected by rising unemployment”.

According to the Annual Financial Report of Portuguese Municipalities, conducted by the Order of Chartered Accountants, Portimão is one of the most indebted Portuguese municipalities (with liabilities of €147,925,098), being the second in the country with the most extensive debts to suppliers.

In total, two years’ worth of income would be necessary to settle the amount that is overdue for payment to suppliers (€116,000,000). Portimão was also the municipality with the largest increase in terms of liabilities between 2009 and 2010, amounting to around 60%.

“The delays in payments to suppliers have a major implication on small businesses,” said Paulo Pacheco, predicting greater difficulties for local entrepreneurs “because they have to bear the IVA (VAT) related to the debt”.

“The Government should be aware of this situation and take action in order to reduce taxes on small businesses (already struggling to survive),” he said.

According to Paulo Pacheco, the “situation is unsustainable for small business owners and represents a death certificate for the companies.”

The Annual Financial Report for Portuguese Municipalities analysed the financial health of 308 municipalities, 304 local companies and 29 municipal services, based on the official data declared in 2010.

According to the study, the municipalities and municipal companies globally owe about €10 billion and are taking longer to pay suppliers, putting local economies, already held by a thin thread, at risk.

About 80% of the 308 municipalities have little ability to generate additional revenue, depending on at least 50% of the funds being transferred by the state.