Councils face ‘financial Asphyxia’ with up to 30 municipalities in danger of not being able to pay staff wages.
The delay in sending bail out money to councils from the government’s Municipal Support Fund is pushing councils closer and closer to meltdown with firm payment promises from the Minister turning to dust.
The reason for the financial crisis, according to the president of the National Association of Municipalities, Rui Solheiro, is the "slippage by the Government in relation to the Municipal Support Fund."
This fund was due to be distributed in accordance with the Local Finance Law as from last January, but Ministers have struggled to get the money to where it most is needed, such as the financially bombed out Portimão.
The Government promised the money would arrive in February. Then the Deputy Minister of Regional Development, Poiares Maduro, said that there was a delay and it would be in late March at the latest, then it moved to 'the end of April' which falls in the coming week.
The lack of certainty has placed councils in a state of "financial suffocation" as the lack of agreed funding could jeopardise their ability to pay their payroll costs.
Gaia, Aveiro and Portimão municipalities are facing the greatest difficulties, but there are around 30 that are desperate.
The money from central government is not being sent to pay running costs, it is to clear the councils’ debts with suppliers some of which have been waiting several years for payment. The loans under the Municipal Support Fund rules also enabled councils to renegotiate any short- and medium-term borrowings to reduce the cost of loan repayments.
