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Loulé council's financial competence humbles detractors

loulesquare2Loulé Council aims to be free from the "government Troika" by paying off its LMP loan early.

The Loulé mayor has announced that the council will recover its financial autonomy by paying off €10 million from its loan by the year end.

Vítor Aleixo said today that the payment of the Programme to Support the Local Economy debt will be made by the end of the year and moreover aims to reduce rates across the area while implementing a programme of social assistance to the needy.

Aleixo said all this is possible as it has been possible to combine an increase in cash from the Municipal Transaction Tax (IMT), with a reduction in council spending.

In relation to 2013, spending by Loulé council has fallen 6.2% and revenues have risen 4.6%. "We are fulfilling our commitment," said Aleixo during a meeting with media designed to take stock of his first year in office.

The update of property values in Loulé, a council area with a strong foreign ownership, was another factor that allowed him to ease the council’s debt burden.

When he took over, the socialist mayor said he found the city in a state of financial collapse with liabilities of €80 million, a situation that he says was "untenable."

As part of his clearout the mayor is insisting on an audit of the council’s accounts with a focus on the years 2010 and 2011, "We have to know how it was possible to spend so much money."

The aim of the audit, said Aleixo who clearly has received a good standard of PR training, was to “learn from past mistakes and ensure that those mistakes are not repeated."

The Programme to Support the Local Economy loan of €14.5 million was signed for by the previous Social Democrat regime in December 2012 and had a repayment deadline of November 2017.

Vítor Aleixo said the early payment of the loan will help reduce property rates next year and give the authority greater financial autonomy.

"Given the huge loss of revenue that is forecast for the coming years, we decided to settle in full the €10 million that has to be paid by November 2017," said the mayor, attributing the expected revenue decline to the extinction in 2018 of the share of property transaction tax the council receives, (IMT), and loan interest payments of €4.2.

The end of the council’s share of IMT will see a 23% fall in the council’s average annual income. This tax alone boosted council revenues by 4.6% last year as the local property market struggled back to life.

Aleixo also wants to recruit staff but the government is imposing limits next year so he plans to keep personnel expenditure at the same level as the last three years.

Loulé council has been able to get a grip on its expenditure, even against a forecast of declining revenues, yet other council executives continue to spend, waste and argue.