Madeira Government awarded 458 million euro loan without State guarantee

The Autonomous Region of Madeira was authorized by the State Supplementary Budget to borrow up to 10% of the 2018 regional GDP - 495 million euros - to face the crisis caused by the pandemic.

Rafael Marchante / Reuters

The Government of Madeira has awarded a loan of 458 million euros to finance measures to support the losses caused by the covid-29 pandemic to the consortium formed by Banco Comercial Português and Caixa - Banco de Investimento.

“The Government Council met today, in an extraordinary way, to approve the award of the covid financing, in the amount of 458 million euros, to the consortium formed by Banco Comercial Português, SA and Caixa - Banco de Investimento, SA”, you can read in the press release released this Friday by the vice presidency of the Madeiran executive.

In the document, the Government of Madeira recalls that it “claimed” the approval of the Government of the Republic to carry out this operation, having “waited several weeks”.

"Since this did not happen" within the predicted period [October 09], the Regional Government, considering that it has no more time to wait, decided to go for a debt issue without guarantee from the Republic ", he highlights.

On October 9, the Regional Government of the PSD / CDS coalition informed in another note distributed by the vice-presidency that, “after the deadline for a response from the Government of the Republic, the region decided to proceed even without the personal guarantee of the State, given that it cannot run the risk of reaching November and December and not having the money available to meet the needs of citizens and companies ”.

In the document, the island executive emphasizes that this loan "aims to cover exceptional financing needs to face the effects, direct and indirect, caused by the pandemic of the covid-19 disease".

It also indicates that "it is made in the amount corresponding to 10% of the Gross Domestic Product (GDP) of the region of 2018, as foreseen in the Supplementary State Budget for 2020".

"The award, now approved, occurs after 21 proposals have been received from national and international credit institutions, of the 32 that were consulted by the Regional Government of Madeira", emphasizes the vice-presidency.

It also informs that this is a bond loan, which has an amortization period of 50% in 13 years and the other 50% in the following year.

The Autonomous Region of Madeira was authorized under the Supplementary Budget of the State to borrow up to 10% of the 2018 Gross Domestic Product (GDP) regional - 495 million euros - to face the crisis caused by the covid-19.

The Regional Government decided to use a financing of 458 million euros, since the payment of the last installments of the debt to the State, under the Economic and Financial Adjustment Program (PAEF), was postponed.

On September 30, the President of the Regional Government, of the PSD / CDS-PP coalition, even announced that the President of the Republic had informed him that he could count on the State's guarantee for the loan of 458 million, to face the socioeconomic crisis generated by covid-19.

“What the President of the Republic told me is that the Government [of the Republic] was going to take on that guarantee, because it is a guarantee that has no cost implications, nor any burden for the Government, but for Madeira it is important, because it will reduce substantially the interest we have to pay ”, he explained at the time, but this did not come to fruition.

Without the endorsement of the State, Madeira "will have a charge on the amortization of around 84 million euros", said the island official.

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