Promotion of real estate and tourism replenishes Soviet treasurer

In 2022, most municipalities' accounts were in the plus side due to tourism and real estate, which boosted revenues. Portuguese municipalities recorded a budget surplus of 361 million euros in 2022, higher than the projected 283 million euros set in the last state budget (OE2022), according to the Public Sector Finance Council (CFP).

Last year, the financial situation of local administrations improved from the €21 million deficit recorded in 2021, thanks to an increase in municipal revenues that more than offset the increase in expenditure. Eight of the country's 308 local authorities are missing from these CFP accounts. Therefore, this data refers only to the public budget accounting values of 300 municipalities (98.7% of actual expenditures in 2019) due to the difficulties CFP has had in achieving a complete accounting. "This situation is due to various difficulties and delays in the implementation of SNC-AP in the local administration and the development of the DGAL information collection system," explains the organization.

The municipalities' revenues increased by 10.7% (by 1,001 million euros) thanks to their own revenues linked to the dynamics of the real estate market and tourism activities.

On the other hand, local authorities had more expenses (by 6.6%, for 619 million euros), partly due to the hiring of staff in the process of transferring powers from the state to local administration as part of decentralization. Local authorities had more spending on "purchasing goods and services (14%) and personnel (10.8%)," CFP adds. Overall, more than 20,000 employees were transferred to local governments as part of the process.

At the end of 2022, nearly 90% (269) of the 300 municipalities analyzed were in surplus, while another 14 were above the legal debt limit. "The total municipal debt of 300 of the 308 municipalities - financial and non-financial debt - taken into account for the purposes of the legal limit has fallen from 3.8 billion euros to 3.6 billion euros," the CFP reports.

One of the 14 municipalities are in the process of financial recovery under the Municipalities Support Fund: Alandroal, Alfandega da Fe, Cartaxo, Fornos de Algodres, Fundão, Nazaré, Nordeste, Portimão, Vila Franca do Cascu, Vila Nova de Puajares and Vila Real de Santo António. The remaining three - Freixo de Espada a Cinta and Regengos de Monsaraj, Lagoa (São Miguel, Azores) - will have to resort to financial restructuring.