A €19.2 million loan allowing the borough of Vila Real de Santo António to restructure and pay off its debts has been approved by the Court of Auditors.
The money will come from the municipal support fund FAM (Fundo de Apoio Municipal), which granted Portimão’s debt-strapped council a much larger €142.5 million loan earlier this month (click here).
Most of VRSA’s debt came from repairs to the borough’s sewage system, mayor Luís Gomes said in a statement.
He said that in 2005, “sewers were still being emptied into the Guadiana River which was putting the Portuguese State at risk of paying millions in fines to Brussels”.
The FAM loan is part of the borough’s own financial adjustment plan, which was launched five years ago and has already saved the borough over €10 million through a series of measures designed to cut the council’s costs.
Tourist tax just two months away
Vila Real de Santo António is two months away from becoming the first Algarve borough to charge a “tourist tax”.
The tax was supposed to be charged this summer but the idea was rejected by hoteliers who warned that the decision would “create accounting problems and affect hotel bookings that had already been taken”.
It was agreed that the tax would instead be charged starting January 1. Every visitor will have to pay €1 for up to a maximum of seven nights.
This means no one will pay more than €7 per stay, even if they stay in VRSA for three weeks. The revenue will then be channeled back into the tourist sector.
VRSA council hopes to make around €500,000 from the tax.