Following the weekly executive meeting, the mayor announced the approval of an agreement draft between the municipality and ARM to settle and pay outstanding debts accrued under the previous two socialist administrations.
During the socialist administrations (2013-2021), a dispute emerged because they refused to pay the increased rates set by ARM for water supply, considering them illegitimate, leading to a lawsuit against the public company.
On Friday, the Regional Government, also a PSD/CDS-PP coalition overseeing ARM, announced an agreement under the law permitting “agreements for settling local authority debts,” pending approval by the City Council and the Municipal Assembly.
The government clarified that the agreement is based on a special provision in the 2025 State Budget Law titled “Agreements for settling local authority debts,” allowing for agreements to reduce overdue interest by 30% as of December 31, 2024, within 180 days of the law’s enactment.
The agreement thus includes an estimated interest savings of 19 million euros, as stated by Cristina Pedra today.
The current administration, which assumed office in October 2021, reached an agreement with ARM in 2022 and began paying all invoices from that date.
The approved agreement pertains to previous debts, including interest, highlighted the mayor.
“In February this year, we executed a payment of 980,000 euros. We had five days to pay, and we did so in three, but now 58 enforcement actions have been issued with unfavorable rulings against the Funchal Municipality, totaling 25 million euros,” she explained.
The municipality then decided to seek a solution with the Regional Government and ARM for paying overdue bills, which amounted to 53 million euros by the end of 2024.
“We have not abandoned the principal lawsuit; we are not conceding, and the judge will decide the merits of the main case. However, we cannot have our accounts seized,” emphasized the mayor.
With this payment plan extending to 2044, the court will not execute any actions against the council, nor seize bank accounts or demand bank guarantees, she noted.
Pedra also highlighted that if the court rules in favor of the Municipality, the funds will be returned. If the decision is unfavorable, the debt will be frozen without accruing additional interest.
The Funchal Municipal Council currently consists of six members from the PSD/CDS-PP coalition and five from the Confiança coalition, led by the PS, with PSD/CDS-PP holding a majority in the Municipal Assembly.
