The proposed law on the legal regime for municipal financial recovery and which regulates the Municipal Support Fund (FAM) was approved this Thursday, June 5, by the Council of Ministers, and will now be sent to the Assembly of the Republic, where it will be discussed on the 18th.
However, the FAM does not have the support of the National Association of Portuguese Municipalities (ANMP), with which the Government is still negotiating.
On the basis of the lack of agreement, is the participation of the municipalities in the financing of the FAM, which, as revealed in the statement of the Council of Ministers, will count on 650 million euros.
An amount that will be gathered over five years, starting in 2015, providing for the Government's proposed law that the contribution of the Municipal Councils be 70% (about 455 million), while the remaining 30% will be guaranteed by the State, which would go ahead with the money first.
It would be out of this 30% guaranteed by the State that "emergency aid" would appear to the 29 most afflicted Municipal Councils, namely the one in Portimão, as Sul Informação yesterday reported.
The ANMP, chaired by the socialist Manuel Machado, mayor of Coimbra, defends an inverse distribution of the effort, with municipalities guaranteeing only 30% of the Fund, while defending that the 350 million euros left over from the Support Program Local Economy (PAEL) are now transferred to the FAM.
For June 16, two days before the discussion of the Government's proposed law in Parliament, a meeting of the ANMP Board of Directors is scheduled to debate the issue, precisely in Portimão.
If any proposal emerges from this meeting that may allow an agreement to be reached with the Government, a meeting of the ANMP General Council may be called for the following day.
Yesterday's statement from the Council of Ministers says that "for the first time" is created "a permanent and structural mechanism to resolve situations of serious financial imbalance in municipalities."
The Municipal Support Fund (FAM) has the objective of «the financial recovery of municipalities that are in a situation of financial disruption, as well as the prevention of these situations. The municipal financial recovery regime provides for the legal and financial mechanisms necessary for the adoption of measures that allow a municipality to reach and respect the total debt limit provided for by law».
The fact that the FAM's share capital is held "by the State and by all the municipalities" is seen, in the Government's view, as a guarantee of "solidarity between the State and municipalities and between all of them".
However, "until the total realization of the share capital, the State guarantees the Fund's financing needs arising from the commitments assumed under the financial assistance granted to the municipalities".
In addition, the statement adds, "the municipal financial recovery is carried out through a contract signed between the Fund and the municipality, called the municipal adjustment program (PAM), which includes a set of specific and quantified measures aimed at reducing of each municipality's debt up to the legally permissible limit. Compliance by the municipality that accedes to the FAM of its obligations, including the respective adjustment program, is subject to strict and permanent monitoring by the FAM».
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