|
FITCH RATINGS, the leading global rating agency, says in a recently published report, that Portuguese local and regional governments continue to be underpinned by a strong institutional framework, with tight control and supervision by central government bodies, oversight by the National Court of Accounts, and a high overall standard in financial reporting. In the special report, published last week, Fitch take a very positive view of the Portuguese central government’s powers to monitor local governments’ activities and procedures, including debt contracts, which allows the central government to assess accurately the condition of local and regional finances. “Strong central government supervision makes possible support more likely in cases where their finances may deviate from the objectives set at State level,” said Guilhem Costes, Senior Director of the International Public Finance team. Up to the present time, the bulk of public spending in Portugal has been concentrated at central government level, whilst regional governments, municipalities and parish councils together account for only an estimated 16 per cent of the total. The American company’s report, however, concluded that the absence of regions in Continental Portugal has been a principal factor in helping to strengthen the municipalities’ links with the central government, which, it said, is a positive credit factor.
In Portugal, unlike other European states, only two autonomous regions, Madeira and the Azores, have tangible budget responsibilities along with considerable tax-setting powers. Fitch’s report also pointed out that the new financial law, introduced in 2007, will have an overall positive impact, as it allows the central government to gain better control over the various municipalities’ total indebtedness. This new financial law has modified debt limits to now include commercial debt. The report considered this as another positive measure as it will encourage municipalities to speed up payments to suppliers. At a regional level, however, there is an Algarve pressure group, led by the Social-Democrat MP, Mendes Bota, who don’t agree with most of the findings revealed by the report and consider that regionalization should be implemented as quickly as possible. The ‘Regions Yes!’ civic movement has instigated a national campaign urging people to sign a petition to be presented at the Parliament, requesting MPs to call a new referendum on regionalization.
However, it should be remembered that, in 1998, the population overwhelmingly rejected a referendum calling for the creation of eight regional assemblies. The proponents, a group which included Jose Socrates’ Socialist Party, claimed that regionalization would result in more efficient government, as those responsible for the creation of policies would be closer to the point of delivery of services. The Social Democratic Party was prominent among the group of opponents who, on the other hand, claimed that regionalization would result in less efficient government, through the imposition of another layer of bureaucracy. They argued that one more layer of government would leave the political system open to the introduction of inefficiency, corruption and political opportunism, and that the town councils, either singly or working together, had shown themselves capable of handling local interests.
 |
Subscribe to this comment's feed
Show/hide comments