The Municipality of Jerez has received over 456 million euros since 2015 of the management fund, a credit channel authorized by the Ministry of Finance for local entities in financial difficulty. With this amount, the City of Jerez continues to be the one that has received the most aid in all of Spain, and by far, from this credit grant, which was created to maintain over time some extraordinary measures that have begun to be adopted in 2011 to save the municipalities, which at the time were suffering from serious funding problems due to the ongoing economic crisis.
To date, there is no other entity that comes close to Jerez in amounts granted by the management fund. According to the latest data published a few days ago by the Ministry of Finance, dated up to the beginning of this month of November, the City of Jaén has currently requested 269.2 million and Parla, 224.1 million. Precisely these three entities continue to share today the classification of critical financial risk situation by the Independent Authority for Fiscal Responsibility (Airf).
In this way, the management fund of the Ministry of Finance has become in recent years the ‘drawer’ from which the cumbersome debt that the Municipality of Jerez drags along to try to repay it on more comfortable terms is being removed — to date the council municipal has loans that they will finish liquidating in 2050—. According to the 2020 budget, the total debt of the Consistory exceeds 1,000 million euros, of which over 800 million correspond to financial liabilities. And more than 90% of this amount is already linked to this fund managed by the Official Credit Institution (ICO).
The advantage of these operations, as the executive maintains every time he makes use of them, is that it is the only alternative for refinancing debts, thus lengthening the repayment terms over time at an interest well below that offered by the market without the city budget being seriously cut to meet its payments. Furthermore, the law prohibits having recourse to banking institutions on one’s own behalf. This has also allowed it to reduce the debt with its suppliers, which is currently at one of the lowest values in recent years.
But this financial support measure also has its detractors, who continually allude to the “kick forward” of debt and the need to adopt other types of measures. In fact, there are groups that continually ask for debt forgiveness.
In this 2022, The Municipality has provided 23.9 million euros of this credit line. The circumstance arises that this year Jerez is not the local authority that has requested the most money from the development fund, as has been the case since 2016. Thus, on this occasion, other municipalities surpassed it, such as Speak out (received more than 131 million), Marbella (40.1 million), Jaen (39.2 million) e the neighborhoods (32.8 million). This, in fact, was the year in which the consistory demanded less, not only since the development fund was created in 2015, but also since the first extraordinary measures began in 2012 to deal with the difficult situation the Commons were dragging on at the beginning of the last decade.
Of course, the management fund also served the Municipality to refinance the historic debt it had with the Treasury and the Revenue Agency, which came close to 100 million euros. The loan signed last year made it possible to terminate the amortization agreements signed in 2014 and which forced the municipal administration to carry out a substantial financial outlay in its final years of validity. In exchange, a loan was signed which made it possible to repay these amounts in the next few years with easier installments to deal with for the municipal treasury, at least in the first two years of validity.
Payments to suppliers, repayment of loans…
These amounts received from the management fund had to be used to pay invoices to suppliers, meet payments ordered by judgments, refunds of transfers received from the State, repayment of other loans and, also, liquidate debts that were owed to the Administration. The 23.9 million euros allocated this year by the Municipality They were distributed as follows.
Therefore, 9.2 million euros have been set aside to participate commercial deadlines, that is, the payment of the amortization and interest of other loans that the Consistory has to deal with. The Municipality of Jerez, since the management fund was created in 2015, has requested amounts for this purpose, even if in 2022 it was significantly lower than previously requested.
On the other hand, to settle payments ordered through judicial sentences, requested 7.4 million euros. In September last year, the municipal plenary assembly gave its green light to the request maximum of 9.6 million euros, an amount which, to date, has not been entirely disposed of. Since the Ministry of Finance has allowed these debts to be met with a loan from the development fund, the City of Jerez has requested more than 146 million euros for this purpose. Naturally, it is already envisaged that this amount will be increased next year as the local administration already has the authorization of the Municipal Assembly to request a maximum of 28.3 million from the management fund for next year.
Furthermore, at the end of March, another loan of €6.7m was approved to attend unpaid invoices with municipal suppliers. On the other hand, she also received around 512,000 euros from refunds which must be made to the State for abusive transfers from previous years (the amount was the same as in previous years).
A financial debt of over 920 million euros
According to the financial debt report included in the municipal budget file for this year, which came into force a few weeks ago, the Jerez City Council will close 2022 with a financial debt of approximately 872.2 million euros, an amount to which must be added the 48.5 million that Emuvijesa still has to repay to the banks. Therefore, the municipal bank’s debt will be about 920.8 million at the end of this year.
According to the current adjustment plan, the document that establishes the measures to increase revenue and reduce municipal expenses (the Consistory must reform it and present it to the treasury every time the management fund is used), in 2023 the residual debt will continue to increase to about five million euros.
However, these are still predictions that everything indicates will be changed from next year Finance costs will increase exponentially which the municipality has to deal with. Thus, of the 15.8 million euros of amortization and interest on mortgages that will have to be paid this year, they will rise to more than 38.2 million as the Consistory will have to start repaying the greater amount of credit it currently has against it, the one he signed in mid-2021 to unbundle much of the financial debt he owed up to then and, like other management fund loans, has a two-year grace period.
