The local government recorded a budget deficit of 15 million euros last year, the first since 2013, but still below the estimate in the national budget for 2021, the Council for Finance (GVB) announced on Wednesday.
In the report on the budgetary evolution of local government in 2021, which is based on public budget accounting figures for 299 of the 308 Portuguese municipalities, the CFP states that “a budget deficit of 15 million euros, the first since 2013, but lower than forecast by the OE2021” [Orçamento do Estado para 2021]”which estimated a deficit of EUR 216 million.
The institution led by Nazaré Costa Cabral explains that the increase in municipal spending in 2021 contributed to this performance, exceeding the increase in revenues, although the latter aggregate has recovered from the fall in 2020.
The GVB indicates that municipal revenues have increased by 11%, more than double the OE2021 forecast for the local subsector (4.8%).
In contrast, revenue from transfers and tax revenues showed “a much more favorable development than foreseen in that budget programming document”.
For example, municipal tax revenues, which “practically stagnated in 2020”, showed a much more favorable evolution in 2021, based on the sharp rise in the IMT.
“This tax, whose dynamics are strongly linked to the very favorable situation in the real estate market in 2021, increased by 38% in 2021, more than recovering from the decrease recorded in the immediately previous year, to about 1.3 billion euros “points out.
According to the same data, municipal spending increased by 14.6%, driven in equivalent terms by the growth of primary current expenditure and the increase in capital expenditure, especially investment.
The continuity of the pandemic situation, in particular in the first half of 2021, and the subsequent recovery of economic activity in the second half of the year contributed to the observed evolution.
The CFP emphasizes that the direct impact on local government spending with Covid-19 measures was 99 million euros higher than in 2020, contributing to the increase in spending.
Without this increase in spending due to the covid measures, the institution indicates that there would be a surplus on the part of the municipalities, albeit “less than that of 2020”.
“Despite the limitations on the full availability of budget and financial information, there are indications that the unpaid expenses of the municipalities have decreased in 2021, both in terms of non-financial liabilities and unpaid bills”points.
The same report, on the other hand, points out that already delinquent and delinquent debt “will have remained at the same level as in 2020, although some municipalities have registered a deterioration in this indicator”.
According to the analysis, the backlog, which has been on a declining trend since 2012, amounted to 22 million euros in consolidated terms at the end of last year, a decrease of approximately one million euros.
It notes, however, the increase in late payments of ineffective expenditure of around eight million euros, “compensated in 2021 by the delay in the repayment of financial obligations”, largely related to delays in payment to the statement of loans to the municipality of Vila Real de Santo António.
The GVB indicates that between December 2020 and December 2021, the number of municipalities with payment arrears will have increased from 60 to 63.
But about four-fifths of the 308 municipalities had no payment arrears at the end of that year, making a total of 245 municipalities.
Local government spent €310.8 million in 2021 to fight the pandemic
Spending by local governments on measures to fight the pandemic rose to €310.8 million in 2021, an increase of €99.4 million from the previous one, the Council for Finance (CVB) announced on Wednesday.
In the report on the budget evolution of local government in 2021, released on Wednesday, the CFP points out that the total effective expenditure of local government with covid-19 measures in 2021 was 310.8 million euros, compared to the 211.4 million euros. registered in 2020.
The largest part of this expenditure relates to social support for families, which amounted to 109.6 million euros, compared to 63.4 million euros last year.
Personal protective equipment, medicines and others, which represented the highest amount in 2020 (€102.8 million), stood at €82.1 million, while covid tests accounted for €6.6 million.
CFP data also indicates that 25.1 million euros was spent on health, equipment and other, compared to 22.4 million euros in 2020.
The support to companies in turn represented 73.7 million euros, compared to 18.4 million euros in 2020.
The other expenses are divided with 5.6 million euros for other expenses (3.3 million euros in 2020) and 8.1 million euros for other support (1.2 million euros in 2020).
The CFP points out that the direct impact on local government spending with Covid-19 measures was “€99 million higher than in 2020, contributing to the increase in spending”.
So assuming everything else is constant, without this increase in spending due to covid-19 measures “There would have been a surplus at the municipalities” in 2021, given the registered deficit of 15 million euros.
More than four-fifths of municipalities in financial equilibrium in 2021
More than four-fifths of the 292 municipalities that provided information were in a situation of financial equilibrium at the end of 2021, while 16 municipalities were above the legal debt limit, the Council for Finance (GVB) reported on Wednesday.
In the report on the budget evolution of the local government in 2021, released on Wednesday, the institution chaired by Nazaré Costa Cabral indicates that at the end of last year 259 of the 292 municipalities for which information is available are in a situation of financial equilibrium from the perspective of the Financial Regime for Local Governments and Intermunicipalities (RFALEI), when this was 253 in 2020.
By contrast, at the end of 2021, there were no fewer than 16 municipalities above the legal debt limit, fewer than the 22 registered in 2020, the year in which it increased compared to 19 in 2019.
Of the 16 appointed by the CFP, 11 were in a process of financial recovery under the Municipal Support Fund: Alandroal, Alfândega da Fé, Cartaxo, Fundão, Nazaré, Nordeste, Paços de Ferreira, Portimão, Vila Franca do Campo, Vila Nova de Poiares and Vila Real de Santo Antonio.
In the other five municipalities, the GVB confirmed the (mandatory) compliance with the figure for financial sanitation, “with the exception of the municipality of Lagoa (São Miguel, Azores), which exceeded the total debt limit in 2020, as a result of the inclusion as a financial liability of a lease (in EUR 15.7 million), following an audit report by the Court of Auditors (TdC)”.
The number of municipalities with debt below the legal debt limit was 276 out of 292, “a universe representing approximately 85% of the total municipal debt”.
The report also indicates that the total debt of municipalities eligible for the application of the legal limit will have decreased by EUR 124 million in 2021, as the non-budgetary debts and the statutory exceptions for the application of the respective limit are disregarded, rising to about 3.6 billion euros at the end of the year.
The CFP indicates that by 2021, the total amount of non-budgetary debts, subject to exceptions in the law reported by the municipalities, will have increased by 22 million euros, an amount lower than the 79 million euros recorded in 2020.
“Despite the global reduction in the total debt taken into account for the application of the legal limit, 107 municipalities will have registered increases totaling approximately 215 million euros. Due to the decrease observed in the remaining 185 (340 million euros) “refers.
According to the CFP, the debt reduction has been transversal across all levels and “will have been more intense in the municipalities with the most debt, although most of it has taken place in those whose ratio is below the legally set limit and which clearly brings together.” “.
The CFP indicates that by 2021, the total amount of non-budgetary debts, subject to exceptions in the law reported by the municipalities, will have increased by 22 million euros, an amount lower than the 79 million euros recorded in 2020.
Source: DN
