council debt
More than half of the province’s largest town have applied for loans to help them balance the books
13.08.09 - 17:17 -
EMPTY COFFERS. No money to pay suppliers and service providers. / SUR
The borrowers
The economic problems which have hit families and businesses have also left Town Halls throughout the region struggling for cash. Like many families, their income has fallen to the extent that they can no longer meet their bills, a situation that in some districts has existed for over a year. The collapse of the construction industry, a major source of income from licences and planning permissions, has left a considerable gap in budgets. Like local authorities worldwide, Town Halls had planned their expenditure based on budget predictions. Many had taken on contracts for public works and other commitments, but with the fall in income the debts began to pile up.
To help with the crisis the government relaxed some restrictions and timetables relating to IVA (VAT) and interest repayments and created the “Instituto de Crédíto Oficial” (ICO) to which local authorities could apply for loans to allow them to pay their debts to small and medium sizes businesses and individuals. This lifeline has been taken up by 13 of the 22 largest towns and cities in the province, borrowing a total of 113.2 million euros.
Fuengirola has the dubious honour of being top of the list of borrowers, receiving 58 million, which will go to pay current and old debts. The loan will rise to 72 million with interest and is repayable over six years and, in that period the council believe they will able to balance their books.
At the other end, Torremolinos has requested just 13 million, roughly half of what that currently owed. Just down the coast Benalmádena’s finances are not looking healthy with over 84 million already owed to financial institution and debts of 72.8 million to suppliers and service providers. The council has managed to borrow 6.1 million to clear some of their debts.
In Marbella, keen to show its new colours, the Town Hall has turned down help from the ICO and has drawn up a plan to pay its debts within a three month period. Around the province it would seem that no authority has escaped the fall out from the recession, some have fared better than others, but all have needed to look hard at their financial management, which, in the long run, is possibly no bad thing.
