The financial position of the Portuguese municipalities presented a “remarkable development”, although there are “aspects to improve”
In 2016, Portuguese municipalities collected more taxes, reduced their debts, recorded the lowest amount of liabilities of the last 11 years and for the first time since 2006, total revenues surpassed total expenses. The three big municipalities best placed in the ranking were Sintra, Porto and Leiria
The Financial Yearbook of Portuguese Municipalities, published by the Order of Certified Accountants, presents an economic and financial analysis of the accounts of the 308 municipalities for the year 2016. This publication, in its 13th annual edition, publishes a financial directory of the Portuguese municipalities, completing the period from 2003 to 2016.
In this report, it is stated that although there are “aspects to improve”, the financial position of the Portuguese municipalities showed a “remarkable improvement” in 2016.
Regarding tax collection, municipalities collected 2 644 million euros in 2016, which represents an increase of 122 million euros compared to 2015. This was mainly due to the increase in direct tax revenues, namely from the Municipal Tax on Real Estate (+72 million euros), and the Corporate Municipal Tax (+67 million euros), thus offsetting the reduction in the Municipal Property Tax revenue (-45 million euros) caused by application of lower rates in 223 municipalities.
Regarding indebtedness, the report states that 276 municipalities have reduced their debts. This decrease was seen in both medium and long-term debt, which stood at 3 699.2 million euros in 2016 – corresponding to a decrease of 430.3 million euros (-10.4%) compared to 2015 – and in short-term debt, which decreased from 1 464.8 million euros in 2015 to 1 233.2 million euros in 2016. This debt reduction led to the lowest level of liabilities in the last 11 years, although the amount is still quite high, reaching a total of 5.1 billion euros. It is also mentioned that the ratio between total debt and the current revenue (average of the last three years) is 52%, which proves to be “a good indicator of the improvement of the overall debt situation of local authorities” (the legal limit is 150%). On a positive note, the report states that the year 2016 was the first year since 2006 achieving a total revenue (8 503 million euros) higher than the total expenses (8 459 million euros). It should also be noted that the number of municipalities with an average payment period (APP) for suppliers of less than 90 days, increased from 240 in 2015 to 257 in 2016, mainly due to early repayment of short-term debt sponsored by state programs. On the other hand, transfers from the General Government Budget to municipalities increased by 2.4%, compared to 2015. Transfers from the European Community Funds had the lowest revenue since 2006, amounting to 196 million euros, while in 2015, the amount stood at 355 million euros.
Among the “aspects to be improved” pointed out by the report, it should be noted that: i) six municipalities had an execution of collected revenue below 50% of the budgeted amount; ii) 32 municipalities increased their debts; iii) 26 municipalities had a APP of more than 180 days and 10 of them had a APP of more than 360 days; iv) 30 municipalities have a total debt ratio above the legal limit of 150%.
Finally, the report also presents the ranking of municipalities that are better positioned considering the overall management perspective. The three large municipalities best placed in the ranking were Sintra, Porto and Leiria. In the distribution of the municipalities by district, in the list of the 100 best classified globally, the first three were Aveiro (19 municipalities), Beja (14 municipalities) and Braga (14 municipalities).
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