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The Portuguese municipalities reached a surplus of 568 M€, in 2019, representing a 112 M€ increase compared to 2018. However, this improvement represents less than half of the expected by the Ministry of Finance (MF) for local government in the State Budget for 2019 (SB/2019), which was 278 M€.

 

The increase in the budget surplus of municipalities in 2019 was due to an 8.1% (646 M€) increase in revenue, higher than the expenditure growth.

 

The performance of revenue in 2019 was mainly determined by the favorable evolution of non-tax revenue, particularly the sale of terrains by the Municipality of Lisbon (approximately 256 M€), and transfers, 275 M€ more than in 2018. Fiscal revenue grew below forecast (1.8% or 57 M€) due to the negative behaviour of the property tax (“IMI”), which was offset by the positive contributions of the other municipal taxes. 

 

The municipal expenditure, which grew 7.1% (534 M€), was driven by the primary current expenditure, explained mainly by the 7.7% increase of staff expenses. 

 

The unpaid expenditure of municipalities decreased in 2019. In all these liabilities, both non-financial liabilities and unpaid accounts decreased by 113 M€ and 56 M€, respectively. The debt already overdue decreased also in 2019 (by €33 M).
The total municipal debt – financial and non-financial debt – relevant for the purposes of the legal limit decreased by 470 M€ in 2019 to 3,75 B€. Based only on this indicator, 21 of the 308 municipalities were above their respective total debt limit on December 31, 2019, which was three less municipalities than in 2018. Despite the overall improvement, 38 municipalities registered an increase in total municipal debt, due to a worsening of their financial situation.

 

The average payment period (APP) remained at 28 days. Still, there was an increase in the number of municipalities showing an APP greater than 90 days in the last quarter of the year.

General Government Sectors . Report nº 5/2020 . 14 May 2020