The overall debt in the Azores increased by 472 million euros, from 2636 million euros in 2021 to 3108 million euros in 2022, according to the report “Budgetary Evolution of the Autonomous Regions in 2022” by the Portuguese Public Finance Council (CFP), revealed yesterday.
“Overall debt, which also includes commercial debt, increased to 3108 million euros (60.8% of the region’s GDP), mainly reflecting the financing of the deficit, the assumption of financial debt by some regional public companies and the completion of the operation to increase the share capital of SATA Air Açores S.A.,” the report reads.
According to the Public Finance Council, “despite the reduction in the budget deficit, the budget situation in the Autonomous Region of the Azores still remained below pre-pandemic levels”.
“In 2022, the Azores presented a deficit of 7.7% of the region’s GDP (GDPR), a decrease of 0.7 percentage points (p.p.) compared to 2021, despite the 1.1 p.p. drop in transfers under the Autonomous Regions Finance Law,” the report states.
The same report claims that “the partial dissipation of the effect of the measures adopted in the context of the pandemic (1.6 p.p. of GDPR)” contributed to this evolution. ”This effect was counteracted by the new financial support from the Regional Government of the Azores to SATA Air Açores, S.A, which in 2022 increased its impact on the Region’s financing needs (1.2 p.p. of GDPR), conditioning the recovery of the budgetary situation,” explaining further that removing the absolute impact of these effects, “the region would have a deficit of 3.1% of GDPR, almost double that seen in 2019”.
The Public Finance Council warns that “the debt ratio in the Maastricht definition has worsened, reaching a new high.”
“In 2022, this indicator amounted to 3064 million euros, equivalent to 60% of the region’s GDP, an increase of 0.6 p.p. compared to 2021,” the CFP points out, adding: ”Although in 2022, the region’s nominal GDP recorded its highest growth (12%) since 1995, this change was insufficient to reverse the successive worsening of the region’s debt ratio over the last fourteen years.”
The report also states that “contingent liabilities increased again to 2439 million euros in 2022 (47.7% of GDPR), mainly as a result of liabilities to public entities outside the budget perimeter, particularly those related to SATA Group companies undergoing restructuring.”
“The growing expression of contingent liabilities, which has been accentuated since 2015, coupled with the successive worsening of financial debt and consequent refinancing needs contribute to raising the risk of sustainability of the finances of this autonomous region,” adds the CFP.
The Public Finance Council reveals that the Azores and Madeira “showed strong economic growth in 2022” in the context of a return to pre-pandemic normality.
“This performance, coupled with the partial withdrawal of the extraordinary support adopted in response to COVID-19, contributed to slowing down the financing needs of the Autonomous Regions in a year in which transfers under the Autonomous Regions’ Finance Law decreased. This reduction is the result of the variation in GDP lagged by two years (2020) under the application of the legal formula,” concluded the report.

in Diário Insular, José Lourenço-director

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Cultures Department (MCLL) as part of Bruma Publication and ADMA (Azores-Diaspora Media Alliance)  at California State University, Fresno–PBBI thanks the sponsorship of the Luso-American Development Foundation from Lisbon, Portugal (FLAD)