2024-10-18 11:31:00
The Municipal Observatory of Galicia reflects the inability of the capital Ourense to spend its revenues due to the prolonged lack of updated budgets.
October 18, 2024 . Updated at 1.51pm
The possibility of approving or expanding municipal budgets makes a difference in the municipal accounts of Galician cities. Vigo and Ourense present both extremes, according to the latest report of the Galician Municipal Observatory of the Red Localiswhich places the former as the one who enjoys greater financial health of Galiciawhile the capital Ourense shows difficulties due to the political instability suffered in recent years. The study measures solvency based on five parameters: financing capacity, residual cash flow, pending payments to suppliers, debt to current income ratio and residual income to current income ratio.
The report highlights that both Santiago and Vigo have not had to resort to budget extension since 2011 (Pontevedra only did so in 2023), which makes “better management” possible. In the case of Vigo, the stability of the local government, with the socialist Abel Caballero mayor for 17 years and the last nine with an absolute majority, has allowed the municipal accounts to be reported every year. This situation helped to manage the balance of income and expenditure more efficiently The debt-to-GDP ratio is 0.1% of your current incomewhile in 2011 it rose to 21%. Furthermore, the city has a positive cash balance of 491.6 euros per capitawhich allows you to cover your financial commitments and undertake investments without depending on debt.
Municipalities report being “on the brink of collapse” due to a lack of funding
Manuel Varela
On the contrary, Ourense is the municipality facing the greatest financial difficulties. Since 2014, the city has expanded its budgets every year except 2020. This situation generated a high treasury surplus, with 1,168 euros per capita, but it could not be used effectively due to the lack of an updated budget . The report warns that this accumulation of resources This does not imply good management, but rather the opposite: the lack of ability to spend them for the benefit of citizens. Furthermore, Ourense has one of the highest financial needs per capita, with -47.2 euros, reflecting a deficit in its accounts. In 2017, its financing capacity (the difference between non-current income and expenses) amounted to 310 euros.
In this area Santiago is in the lead with 78.3 euros for close, demonstrating a high ability to finance expenses with ordinary resources. Followed by Vigo (74.3 euros), Pontevedra (56.7) and A Coruña (53.1). In the case of the latter, seven years ago their accounts presented a better situation, with 75.2 euros per person. In Ferrol, this capacity is very limited with only 11 euros per person. Him rest of the treasurewhich reflects the ability of municipalities to cover their debts at the end of the year, also places A Coruña in liquidity difficulty, being negative at 21.4 euros per capita. It is the only Galician city that has this deficit; while in Vigo it amounts to 491.6 euros.
Santiago and Pontevedra top the list of municipalities with higher pending payments to supplierswith 117.4 and 88.7 euros per inhabitant respectively. At the other extreme, Lugo and Vigo present the lowest figures, with 16.8 and 25.4 euros. As regards the current debt/income ratio, Vigo has managed to practically eliminate its debt, a ratio which has also been reduced by 13 points in La Coruña, while remaining at 22%, thus becoming the most indebted city. The remainder of Ourense’s current revenue reaches 118%, a very high percentage due to the city’s inability to spend its revenue due to the prolonged lack of updated budgets.
Filed in:
Municipal budgets City of Vigo City of Ourense City of Pontevedra City of A Coruña
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