Portuguese municipalities recorded a budget surplus of 361 million euros in 2022, higher than the 283 million euros foreseen in the last State Budget (OE2022), according to the Public Finance Council (CFP).

Last year, the Local Administration accounts improved compared to the deficit of 21 million euros recorded in 2021, based on the contribution of municipal revenue, whose increase more than offset the growth in expenditure, as reported by ECO.

Eight of the country's 308 local authorities are missing from these CFP accounts. These data therefore refer to the public budget accounting values of only 300 municipalities (98.7% of effective expenditure in 2019) due to the CFP's difficulty in achieving full accounting. “This situation results from various difficulties and delays in the implementation of the SNC-AP in the Local Administration and in the development of the DGAL information collection system”, explains the entity.

Municipalities' revenue grew by 10.7% (plus 1,001 million euros), thanks to their own revenues associated with the dynamism of the real estate market and tourist activity. “Which still constitutes a downward risk for the future, if there is a slowdown in real estate transactions and tourist demand”, warns the CFP.

On the other hand, local authorities had more expenses (6.6%, more 619 million euros) partly due to the recruitment they had to carry out in the process of transferring powers from the State to Local Administration, within the scope of decentralization. Local authorities had more expenses with “the acquisition of goods and services (14%) and personnel (10.8%)”, adds the CFP. In total, almost 20 thousand workers were transferred to local authorities under this process.

14 municipalities in debt

At the end of 2022, almost 90% (269) of the 300 municipalities analyzed were in the black, while another 14 were above the legal debt limit. “The total municipal debt of 300 of the 308 municipalities – financial and non-financial debt – considered for the purposes of the legal limit reduced from 3.8 to 3.6 billion euros”, reports the CFP.

Eleven of the 14 municipalities are in the process of financial recovery under the Municipal Support Fund: Alandroal, Alfândega da Fé, Cartaxo, Fornos de Algodres, Fundão, Nazaré, Nordeste, Portimão, Vila Franca do Campo, Vila Nova de Poiares and Vila Real de Santo António. The remaining three — Freixo de Espada à Cinta and Reguengos de Monsaraz, Lagoa (São Miguel, Azores), will have to resort to financial restructuring.