Vila Real de Santo António’s council has managed to access money provided by the Municipal Aid Fund so as to cut expensive short-term debt, much of which was built up to stop the flow of sewage into the Guadiana.
The council talks of continuing its “policy of consolidation of municipal finances, injecting liquidity in treasury and fulfilling its commitments to responsible management,” but the €19.2 million borrowed will have to be paid back by generations of ratepayers over the next 20 years.
Luís Gomes, the mayor of VRSA, said that the approval for the Municipal Aid Fund money is fully transparent and will be used to pay off debt built up in 2015 to improve sewage systems. The money was “to pay for sanitation systems where sewers had emptied into the Guadiana River, putting the Portuguese State at risk of paying millions in fines to Brussels.”
Gomes inherited a council in financial trouble when he took over, in 2005 there were invoices totaling €30 million to pay, some of which had not even been logged in the council accounts.
The new money will enable the council to restructure the debts, to pay off all existing invoices and is part of the financial adjustment plan which already is operating. This five year cost-cutting plan has achieved over €10 million in savings so far.
The €19.2 million comes at a price as there now will be a quarterly monitoring programme run by the Municipal Aid Fund managers to check VRSA are complying with the agreed goals and objectives.
The VRSA amount is but a droplet when compared to the loan to Portimão Council which has managed to borrow €142.5 million from the Municipal Aid Fund under the same terms and conditions.
Comments
Neither a borrower nor a lender be! Sound advice methinks.