The local government demands to renegotiate the municipal debt with the Treasury

The municipal government claims to negotiate a new agreement with the Ministry of Finance to try to reduce the amount it will have to pay next year in payment of amortization and interest on the financial debt of the Jerez City Council. This statement is made a few weeks after having closed a refinancing of the bulk of the financial liabilities that the Jerez City Council maintains with the management fund, the line of credit enabled by the central administration for local entities with financial problems.

According to the data indicated by the mayor, María José García-Pelayo, during the presentation of the poster for next year’s events calendar, the City Council will have to reserve about 18 million euros in next year’s budget to address these obligations. However, according to the councilor, and despite the fact that this amount has been significantly reduced by virtue of the agreement reached at the beginning of the month – initially she should have paid just over 49 million euros – the amount is still high, which is why she assures that The City Council “does not have sufficient capacity” to face it.

In fact, according to what the councilor pointed out this Monday, there is still no date for the municipal government to present a draft with the municipal budget for next year, and this despite the fact that in a plenary session held weeks ago it was stated that an accounting proposal was being finalized that was at the sole expense of the agreement with the Treasury. Now, however, it is noted that they intend to resume contacts with the Treasury to try to reduce this amount for next year and, in this way, not have to deduct it from other items since last year’s amount “has not been negotiated,” according to García-Pelayo.

To this day, the City Council continues to operate with the budget that the previous socialist executive prepared and approved in October 2022. Initially, for this current year, financial expenses increased significantly – they went from approximately 11 to 33 million – since in this year it had to begin to repay the largest loan it has in its liabilities, specifically a loan signed in 2021 with which a good part of the debt was refinanced and whose first amortization installments had to begin to be paid now.

Given that this obvious increase in financial expenses not only affected Jerez but also other local entities, at the end of April, the Delegate Commission for Economic Affairs of the central government agreed to offer a refinancing of these loans with the aim of providing a solution to medium and long term to these entities. To this end, it first approved a postponement of the payment of these refunds, which was initially due to be made in June and was moved to mid-December, and secondly, it opened a line of negotiation with local entities to reach an agreement that, Basically, it is a refinancing of the loans that these councils have with the financing fund.

An agreement with the Treasury of which the details are not known

On the 3rd, the municipal government announced an agreement with the Treasury where a modification of the repayment conditions of these loans for the coming years was specified. Of course, at the moment the details of the agreement are not known, despite the request made weeks ago by this means.

Now, from the little that has emerged is that this year the City Council will have to pay before December 15 about nine million euros as repayment of the main loan. In fact, in the coming weeks the executive will have to fully carry out a budget modification to provide credit for this expense. And, as noted this Monday by the mayor, financial expenses will rise to 18 million until next year, an amount that she assured could not be “negotiated” with the Treasury, hence justifying the claim for a new agreement.

In exchange, the executive will have to increase income through tax means. To do this, he will raise the Construction Tax slightly and will have to review the fiscal schedule to try to increase income from the Economic Activities Tax (IAE). In addition, bonuses on road tax on historic vehicles will be eliminated.