Gualter Furtado suggests incentives for companies, spending cuts, the use of EU funds, and the revision of the Regional Finance Law. Demographic decline could also be countered by immigration. “Immigrants in the Azores are well integrated and have a fantastic association that has done a great job of integrating them,” said the economist, who stressed that the arrival of immigrants to the archipelago should be viewed positively.

Gualter Furtado, former president of the Economic and Social Council of the Azores and former regional secretary for Finance and Planning in the IV and V Regional Governments, argues that the path to more balanced public finances involves stimulating private initiative, cutting spending, making better use of EU funds, and revising the Finance Law of the Autonomous Regions, but he points out several flaws.

“The Azores have a structural problem, which is public finances. Our own revenues, generated by taxes collected here in the Azores and others allocated to us, are not sufficient to finance our overall public spending. In practical terms, our tax revenues only cover 50% of our financing and expenditure needs,“ said the economist in an interview as part of the ”Ordem à Conversa“ initiative organized by the Azores regional delegation of the Order of Economists.

”Where can a boost and a positive contribution come from? From private initiative, exactly. In my view, private initiative and companies need space and not to have competition from the public sector. In addition, the amounts invoiced to the public sector must be honored and paid on time,” he stressed. The role of the Regional Government and the Legislative Assembly of the Azores, he pointed out, is to create conditions to leverage this private initiative and the weight of exports. “We only have one economic policy instrument, which is the budget. Priorities must be set so that the private sector can earn more, sell more, grow, and increase the tax base. I am not saying increase taxes on companies, but broaden the tax base to increase revenues,” Gualter Furtado emphasized.

The manager also considered that the Mobilizing Agendas were a lost opportunity. “(We need) a policy of incentives for capable investment, using the instruments that have been made available to the Region for the capitalization of companies. I recall that we had a very serious problem here, at the level of the PRR (Recovery and Resilience Plan), which was the issue of the Mobilizing Agendas. It was an instrument that we squandered and did not know how to use, due to a number of factors that are not worth going into. But it was an instrument that we lost,“ he stressed.

”As for the capitalization of companies, around €125 million is available in the PRR. Implementation rates are also very low because there is still a lot of bureaucracy. The organizations that monitor and are responsible for managing and providing these types of incentives need to be streamlined and professionalized,“ said Gualter Furtado.

The economist described ”a central and regional public administration that has many shortcomings“ and that does not ”make life easier for entrepreneurs.”

“There is no political autonomy, there is no administrative autonomy, if there is not a minimum of economic autonomy. Economic autonomy is achieved by reducing the Region’s dependence on external sources of funding. More than 50% of our budget comes from external sources of funding and we need to move towards reducing this external dependence,” he warned.

The former president of the Economic and Social Council also pointed out that “obviously the Chambers of Commerce, the University of the Azores, namely the Faculty of Economics and Management, and the entrepreneurs themselves also have to play their part and make an effort.”

In the same interview, Gualter Furtado argued that another way to balance public finances is through spending cuts. “During my six years as regional finance secretary, I never authorized a payment that was not covered by the budget. This is still true today. It is important that our public accounts are balanced by reducing some expenditure,” he stressed. He also pointed out that good use of European funds is an important factor in a region where these funds already represent more than transfers from the State Budget.

“A very sound policy of making good use of European plans and programs, which, unfortunately, for a variety of reasons, not only through the fault of the government but also due to the economic situation itself, is not happening at the moment,” he lamented.

In the same interview given to the “Ordem à Conversa” initiative, organized by the Azores regional delegation of the Order of Economists, Gualter Furtado, former regional secretary of finance, recalled the instability that the end of US transfers for the use of the Lajes Base caused in the region’s accounts. The Azores went from having virtually balanced public accounts and profitable public companies to a “profound imbalance” at the end of 1988, he described.

“One of the main sources of funding for the regional budget was revenue from the Lajes Base. We received around US$40 million annually, at a time when one dollar was worth around 200 escudos. This represented more or less 30% of the budget of the Autonomous Region of the Azores,” he recalled.

At the time, Portugal and the Azores had joined the EEC (European Economic Community), but European funds had not yet reached the region.

Gualter Furtado was the first regional finance secretary to bring a proposal to reduce spending to the Azorean Parliament in 1989. “We requested a review of the Plan and the Budget and also reviewed the medium-term plan,” he said, considering that reducing spending could contribute to balanced public accounts.

“This is the result of a spectacular increase in prices and the fact that many tenders have been deserted. Companies do not accept the prices that were initially indicated,” he explained.

Another recipe for balancing the books in the Azores, said the economist, is “close consultation” with the social partners. A review of the Finance Law of the Autonomous Regions is also essential.

Gualter Furtado recalled that he was part of the working group that prepared the first law. This was followed by downward revisions and, in 2013, a revision with the Troika, which considered that it had “penalized the Azores greatly.”

The Regional Finance Law, he stressed, “is unbalanced and needs urgent revision.”

Gualter Furtado also said he was “moderately optimistic” about the future of the Azores. “I say moderately because the Azores have extraordinary skills for certain types of production, especially in agriculture and fisheries. They have a very valuable location in the Atlantic (…) We have a maritime extension that adds sea to Europe, to the country, and to the European Union itself. There is also enormous potential from the point of view of some strategic sectors, such as climatology, meteorology, oceanographic research, and fisheries… Therefore, the Azores have an extraordinary environment and great advantages, both absolute and relative, compared to other islands. They have everything for quality tourism, properly prepared and well planned, to be a success,” he argued. However, the manager identified indicators and sectors affected by structural delays. “I am referring specifically to the poverty rate, which is very high in the Azores. On the issue of education, and especially school dropout rates, which, despite some reductions in recent years, remain quite high. We also have a problem that is common to all so-called developed societies, but here in the Azores, especially on the island of São Miguel, it is reaching worrying proportions (…), he said.

Correio dos Açores, Natalino Viveiros-director.

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL) as part of Bruma Publication and ADMA (Azores-Diaspora Media Alliance) at California State University, Fresno, PBBI thanks Luso Financial for sponsoring NOVIDADES.