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.