quarta-feira, 28 de dezembro de 2011

Madeira budgets

Below are the regional budgets from 2002 to 2009 according to the Court Auditor's reports. The yearly tax revenue generated in Madeira is now estimated at 650 million Euros, i.e. amounting to about one tenth of Madeira's 6 billion Euro debt!

(EU funding is not totally reflected, since not all goes through the regional budget)

yearregional% state % EU % Credits Othertotal income

Lisbon to Control Madeira Debt Repayment

The first austerity measures for Madeira, resulting from an agreement between the Madeira and the National Governments, were announced yesterday. They include

VAT increase: the minimum VAT is set at 8%, the medium at 12% and the maximum at 22%;
IRS and IRC taxes to be the same as the mainland;
The elimination of the Christmas and holiday subsidies for civil servants and public sector companies;
Reduction in number of civil servants by 2% per year and a 15% decrease in leadership posts;
The regional government to present a plan for remission of contracts for civil servants by the second quarter of 2012;
An increase of tax on fuel of up to 15%;
Tobacco tax increase,
Government investments over the next 4 years limited to 150 Million Euros;
Reduction in subsidies in soprt health and education;
Privatization of public sector businesses in order to reduce operational costs by 15%, with reference to the year 2009;
No new public-private partnerships to be allowed and the exsiting ones to be renegotiated;
The Regional Government is to supply Lisbon periodically with all the information requested;
Most importantly, the Madeira debt is to be administered by the national Institute (Insituto de Gestão das Contas Públicas)

In short, the national Government is taking control of debt repayment in exchange for bailing out the Madeira Government. The practical details of how Madeira is to repay its 6 Billion Euro debt, however, remains obscure.

segunda-feira, 12 de dezembro de 2011

Regional Government fails to comply with Payment Plan to the Pharmacies

Press Release of the National Association of Pharmacies
The Autonomous Region of Madeira’s debt to the pharmacies is at this moment 77 million Euros.
In May 2011, the pharmacies accepted the Regional Government’s payment plan to repay the debt over a period of eight years.
The rigorous execution of the agreed payment plan is essential to guarantee the bank financing which allows the pharmacies to support the back payments they are due.
In the current context of the national banking system’s lack of liquidity, the decision to keep dispensing medicine on credit to patients is not longer in the hands of the pharmacies.
Regional Government of Madeira is fully aware of the situation.
In November 2011, the Regional Government ceased to comply with the agreed payments, making it impossible for the pharmacies to keep dispensing of medicine on credit.
Therefore, we inform that as of the 15th of December, the pharmacies will no longer continue to dispense medicine on credit to the population of Madeira.
The pharmacies are the first to lament this situation, which also affects them negatively.
We hope the Regional Government resumes payments, complying with the accorded Payment Plan, allowing us to fulfill our financial obligations, and so ending this situation which harms both Madeirans and the region’s pharmacies

New road and seawall in Paul do Mar will affect surf spot

From Olhodefogo.blogspot.com August 2011
The Madeiran Government announced the decision to move on with the project of a road and seawall protection on the shoreline in Paul do Mar, from the road leading to the wharf at East until the graveyard area at West. The topic is the security of ninety families living in the area because of the sea advancement, said local newspaper Diário (13.8.2011). It sounds like Jardim do Mar promenade and seawall in Jardim do Mar, part 2. Protecting the houses and keeping intact the surf break is possible. Both goals can be achieved. In front of the surf break there are no houses in danger because of the sea.
As you can check on the picture presented, the new road and seawall (green), go much further out than the existing seawall (red/pink colour) and further West too, passing the graveyard area. This expansion endangers the surf spot in front of the graveyard area as the seawall will be built in the surf break.
The wave in Paul do Mar is very much appreciated for its frequency, regularity, access and it offers intense and extreme surfing experiences. That is why competitions have taken place there. Damaging or destroying it would be a tremendous loss for surf and for the tourism and natural heritage of the island.
How can local authorities defend surf, using its images to promote Madeira as a tourism destination, support surf competitions in that surf spot in Paul do Mar, and at the same time keep destroying the natural conditions for surfing? It's more than enough what has already been damaged and destroyed in other places like Ponta Delgada or Jardim do Mar, just nearby.
However, we are living in a period before elections in October with lots of announcements, without forgetting that in the present economical and social crisis in Portugal, people will have more urgent concerns and needs than concrete seawalls, and we do not know (and if) this construction will be done in the near future. Madeira has no money, as recently announced by its Government. And the situation is not going to change anytime soon.
The construtction project is now on public tender for the estimated price of 7 Million Euros as Diário informs (20.8.2011), and it is funded by the European Union but Madeira has to put in some percentage of that sum. More information soon on this matter.
The public tender was authorized recently (resolution 1134/2011 of Conselho de Governo on the 11th of August, published on the 17th of August in the Oficial Madeira Journal Jornal - Joram). This way the Government "launches" the new road/seawall within the limit of 2011. As Diário says, the «resolution was based in Plano e Programa de Investimentos e Despesas de Desenvolvimento da RAM (PIDDAR) for 2011, in line with PDES - Plano de Desenvolvimento Económico e Social 2007/2013, and also in the Program of Government that started ruling in 2007 and ends now next October. Some years after de first part of Paul do Mar protection, this second part is oficially entitled "Ligação Marginal entre o Cemitério e o Cais do Paul do Mar" (Connection of the coastal road between the Graveyard and Wharf of Paul do Mar.»
In spite of the present economical problems, surfers and citizens in general must be aware and do everything they can to value that surf spot in Paul do Mar and prevent any damage or desctrution.
According to the Government announcement last Thursday (August 11), the goal is to have a 445 meters long road by (actually in) the sea connecting the square area of the graveyard at West with the road that leads to the wharf area at East.
And Government adds: "the new road will have two lines measuring 3.5 meters each one, adding a 1.5 meters sidewallk (South/sea) and 1.2 meters (North/shore). The road will be on a platform conquered to the sea along the shoreline already occupied by houses. Along the new road will be built a seawall and protection from the sea that will be about 500 meters long."

Vitor Freitas elected leader of Madeira Socialists

Vitor Freitas has been elected leader of the Socialist Party in Madeira. A good speaker and an able politician, he is close to the Party grass roots. He previously contested the elections against Jacinto Serrão, losing by a narrow margin; this time he has won with a comfortable majority. Vitor is widely popular and is seen as someone able to galvanize change in the Socialist Party and in the opposition as a whole.

sexta-feira, 9 de dezembro de 2011

City Councillor Victim of GBH

Gil Canha, City Councillor for the PND, was badly beaten up last Saturday night by thugs linked to the PSD. One of the agressors is an ex-convict who accompanied the PSD youth organization in the last inauguration prior to the elections, and was identified by police for hitting Gil with a stick. Alberto João Jardim, the President of Autonomous Region of Madeira frequently incites violence against his political adversaries and has in the past known to have ordered thugs to do this type of dirty work.

terça-feira, 6 de dezembro de 2011

Madeira offshore loses 1/5th of its companies

According to yesterday’s Publico newspaper, more than 500 companies have left the Madeira Offshore, representing a loss of one million Euros per year for the Madeira International Business Centre, the private company which runs the concession since 1978, for a period of 30 years.
Madeira has perhaps one of the only offshores run by a private company. Why the Government should have handed over this lucrative business to a private company, and for a lengthy period of thirty years, is a question often asked. The company has very close ties to the Regional Government and to the former PSD vice-president Miguel de Sousa, who is a partner of the owners in other ventures.

Hitler court case decision

The Court of Funchal acquitted Eduardo Welsh of an accusation of defamation and abuse of press freedom, for having published a photomontage of the President of the Regional Government of Madeira, Alberto João Jardim, dressed as Hitler, on the cover of the ‘Garajau’ newspaper.

The decision considered the Public Prosecutor’s accusation to be unfounded and also acquitted the accused of paying the 5.000 Euro compensation demanded by Jardim.

The judge cited jurisprudence of the European Court of Human Rights in his extensive analysis of the constitutional right to freedom of expression when this collides with the constitutional right to good name, reputation and image.

He concluded that Jardim’s character had not been smudged by the caricature which aimed to criticize acts of ‘intolerance’, ‘incitement to violence’ and his recurrent use of ‘subliminally aggressive’ language to attack political opponents.

Jardim was condemned to pay the costs of the court fees.

segunda-feira, 5 de dezembro de 2011

Portugal's Unrepentant Debtor

by Raymond Zhong,  editorial page writer for The Wall Street Journal Europe.

On this tiny island in the northern Atlantic, best-known for its rich wines and as a stopover for transoceanic cruise ships, debt has been an inescapable topic of late.
Lisbon's debt, but Funchal's too. The capital of this autonomous region of Portugal has lately seemed like an ugly epitome of Club Med fiscal misbehavior. In September, the regional government announced that it had discovered €1.1 billion in unreported debt among its books, increasing the already-huge previous total by a fifth. Global markets shuddered; Moody's downgraded Madeira paper out of concern for "grave irregularities" in the region's budget reporting. A former Portuguese finance minister told The Wall Street Journal recently that "We are looking at Madeira like the Germans look at Portugal."

But here as elsewhere in Europe's periphery, the matter of today's debt is making the equally important question of tomorrow's growth harder to answer. Policy makers seem to hope that the debt crisis will simply rattle sleepy southern economies out of decades-long complacency. Examples like far-off Madeira's suggest, however, that belt-tightening on the EU and International Monetary Fund's model is more likely to grind them deeper into the ground than to spring them back to life. If promoting growth looks like a bleak prospect in Portugal and southern Europe, it can seem near-impossible in Madeira. The island's remoteness makes shipping prohibitively expensive—Madeira is closer to Casablanca than to Lisbon. Many of Madeira's 250,000 inhabitants still work the land, and more than half of the island's area is a nature reserve on which development is illegal. The place hardly has the obvious makings of an economic powerhouse.

What Madeira does have is the power of taxation—or lack of taxation, as it were. Since 1983, foreign companies have enjoyed preferential tax treatment by registering through the Madeira International Business Centre (IBC). Discounts on everything from VAT to capital-gains and withholding taxes have attracted thousands of firms and holding companies to set up shop on the island. Today the IBC is responsible for nearly a fifth of the regional government's tax take. That's pretty good by most standards, but Funchal wants to do even better. At the moment, though, the EU classifies the IBC as a form of state aid, which means that its ability to offer certain incentives is circumscribed. Since 2002, financial firms have been prohibited outright from setting up through the IBC. There are de minimis financial-privacy protections, and companies are not exempted from any of Portugal's famously sclerotic labor laws. That Madeira is not its own state also restrains its autonomy in making tax policy. Companies in the IBC are largely unshielded from Lisbon's fiscal decisions.

These are huge disadvantages considering Madeira's competition just among Europe's low-tax jurisdictions. But cutting a better deal for Madeira is looking harder now that the island's name, both on the Portuguese mainland and in EU policy circles, is inseparable from its debt. Lisbon and Brussels have been eyeing the IBC with suspicion for many years now. The EU has periodically halted new listings to investigate the IBC; it has already forced Funchal to withdraw a number of tax and regulatory goodies that were on offer. The parliament in Lisbon is contemplating amendments to its 2012 budget that would subject non-residents to withholding tax on dividends disbursed by IBC companies. Austerity may have provided the means, and the justification, to finally kill the tax haven off.

The man seen these days as responsible for bringing dark clouds of debt woe to sunny Madeira is Alberto João Jardim, the 68-year-old president of the regional government. After taking office in 1978, Mr. Jardim filled his coffers with EU regional aid and transfers from Lisbon, and set off modernizing Madeira. He built roads and bridges to connect the island's towns and villages. He bored tunnels through the mountains and erected hospitals and schools. It worked. In less than 30 years, Madeira went from one of Portugal's poorest regions to its second-richest, after Lisbon. But then, around the time the euro went into circulation, Madeira's GDP surpassed the national average, and funding from Lisbon was reduced accordingly. Mr. Jardim kept right on building, though, and Madeira borrowed its way into a deep hole.

Today, telltale signs of overinvestment dot the island. Industrial parks and marinas sit abandoned and half-ruined. Amid a cluster of luxury hotels, a beautiful green park is empty nearly every day, built too far out on the rocky shore to be accessible. After a while, even the roads and tunnels and bridges here can start to seem a little too nice for such a small place, as if they were never, ever going to be used quite enough to justify their expense.

The debt scare hasn't halted Mr. Jardim's designs for Madeira, or his strong-armed style. In July he declared that Moody's inspectors were banned from the island after the agency downgraded Madeiran debt. His hand was only strengthened last month when he won his 10th straight regional election, making him one of the longest-serving democratically elected executives in the world. To his detractors, Mr. Jardim is a populist despot whose contempt for democratic niceties is only exceeded by his regard for his own majesty as eternal leader of the Madeiran people. But behind the bluster, Mr. Jardim has shown himself to be a friend to Madeira's pro-enterprise ways—even if cutting ribbons at road projects is still the more reliable vote-getter. He is a vocal defender of the IBC. In 2007, he declared that he wanted to turn Madeira into the "Singapore of the Atlantic." By making the island attractive to foreign business through low taxes and first-class infrastructure, his government would create a "knowledge economy" dominated by professionals and skilled high earners.

The words aren't Mr. Jardim's own, exactly. In 2000, the European Council met in Lisbon to formulate a plan to make the EU "the most competitive and dynamic knowledge-based economy in the world." Why the Lisbon Agenda's promised revolution never came is no great mystery. See "Southern Europe, Economies of." Yet changing the development paradigm in these economies will take scrappy ingenuity at home and international support, both of which are now under threat in Madeira. It will be a long time before Madeira is Singapore. But in economic history, much more has been made of much less. The question is whether Brussels and Lisbon will let anything be made of it at all.

This month the IMF delivered its latest report on Portugal's fiscal consolidation, saying "The envisaged adjustment program for the troubled autonomous region of Madeira will provide an opportunity to signal that errant fiscal behavior at the regional and local levels will no longer be tolerated." Whether "fiscal errancy" includes tax incentives like the IBC is yet to be made clear, but even the policy world's language of crisis resolution tips discussion toward the punitive and away from the genuinely recuperative. Recall Ireland's struggle to hold on to its 12.5% corporate tax rate against French and German pressure.
The wide attention that September's debt revelations received outside of Madeira rankled those on the island who have for years raised concern about Mr. Jardim's spending. But as tiny Madeira steps into the ring with Lisbon and its international creditors, Mr. Jardim may be the island's only hope of defending its prospects as a place for business. The president is something of a hustler for Madeira on the mainland: He has gotten Lisbon to forgive Madeira's debt twice in the past. Mr. Jardim is said to be preparing to take his fight for the IBC all the way to the European Commission and its Portuguese president, José Manuel Barroso.
Madeira—and Portugal, and Europe—probably could have used fewer politicians like Mr. Jardim back when he was building and borrowing like an addict. But mere repentance will not reduce debt or promote competitiveness. Mr. Jardim does not need to be contrite to be useful for Madeira and for Portugal in its moment of opportunity.