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The Government of Madeira counted on having responded, until today, to the António Costa Executive about the guarantee of the loan of 458 million euros, to face the pandemic crisis, which was not confirmed.
The Region thus advances to the loan, next Monday, still without a green light from the national government, despite the guarantee that it has no cost implications or burden for the Republic.
“The Regional Government is already moving forward this Monday towards the completion of the loan, which will allow it to resort to financing exceptional budgetary needs, as a result of the effects of the COVID-19 pandemic. Once the response period of the Government of the Republic has elapsed, the Region advances even without the personal guarantee of the State, since it is not possible to run the risk of reaching November and December and not having the money available to meet the needs of citizens and companies ”, Reported a moment ago the vice presidency of the Regional Government.
Pedro Calado has already given internal instructions to continue with the financial operation that will begin to be set up, urgently.
Although in the last meeting held with the Ministry of Finance, on September 17, the vice president recalled the urgency of a response from the State to the financing operation, amounting to 458 million euros, and that its omission would mean an increase in costs of more than 84 million euros, the Government of the Republic did not send any response – either positive or negative – until the end of the day “, emphasizes Calado, in a note sent to the press.
84 million more in interest
The Autonomous Region of Madeira was authorized by the Complementary State Budget to borrow up to 10% of the 2018 regional Gross Domestic Product (GDP) -495 million euros- to face the crisis caused by covid-19.
The Regional Government will use financing of 458 million euros. On the table is a proposal submitted by a foreign consortium. With the State guarantee, Madeira would have a substantial reduction in interest on loans – from 1.3% to 0.3% -, which translates into annual savings of 6 million euros.
In other words, for a 14-year loan, the Region will have to assume an amortization charge of around 84 million euros.
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