The rising cost of living is affecting everyone. Accounts are already emerging of countless families struggling to make ends meet, while even charitable and social welfare institutions find themselves overwhelmed by the growing tide of appeals for assistance.
The months ahead offer little promise of better days. The warning signs are already evident in the Region’s own Plan and Budget for the coming year, which reveals fewer financial resources for investment and an even greater scarcity of ideas for meaningful reform.
Worse still, the preliminary draft of the State Budget presented by the Minister of Finance has already made it apparent that there is little political willingness to extend a helping hand to the Azores. Extraordinary financial transfers are being reduced—transfers that have served as a thinly veiled means of rescuing the Region’s public finances—while Madeira appears to have been more astute in its negotiations with Montenegro, securing a more generous allocation of funds.
Should the anticipated reduction in European Union funding allocations be confirmed, together with diminished support under the Cohesion Policy, it would constitute yet another severe blow to vulnerable regions such as ours, particularly at a moment when the specter of crisis is already gathering at our doorstep.
The Regional Statistics Service of the Azores (SREA) will publish today the Region’s inflation figures for September, which continue their upward trajectory, particularly in food products, where prices have risen by 5.53%, substantially above the overall inflation rate. Energy products have registered an increase approaching 6%, measured by the average variation of the index. By category, Restaurants and Accommodation Services have risen by more than 8%, while transport costs have increased by over 3%.
Compounding the pressure upon household budgets is the relentless rise in interest rates, pushing monthly mortgage payments up by an additional €92 on a loan of €150,000, or by €122 on a mortgage of €200,000.
Meanwhile, Portugal’s National Statistics Institute (INE) has just reported that the increase in residential rental prices accelerated during the second quarter of this year. Median rents rose in 24 of the country’s 26 subregions, with the Azores recording the steepest increase of all: 16.3%.
Data from the Bank of Portugal reveal another troubling reality: the outstanding stock of housing credit held by Azorean households has already exceeded €2.49 billion, accounting for nearly 70% of all household indebtedness in the Region.
Yet another disturbing indicator tightens the financial stranglehold upon families: the growing burden of consumer credit.
According to SREA, consumer loans and credit for other purposes surpassed €1 billion in June of this year. Equally significant is another revealing figure: loan delinquency remains considerably higher in consumer credit than in housing loans—6.4% compared with 1.4%.
Taken together, these circumstances make the implementation of effective public policies, particularly in the social sphere, more urgent and more demanding than ever. Yet the uncomfortable truth is that the entirety of the Region’s revenues is no longer sufficient even to cover its current operating expenditures.
Burdened by an excessively cumbersome public administration, such as our regional bureaucracy has become; confronted with the chronic underfunding of the healthcare system, whose financial shortfall has already reached €750 million; weighed down by permanently escalating expenditures; and further encumbered by SATA’s ruinous financial accounts, the Region has scarcely any room left to contain public spending. Even the interest payments on regional public debt, already amounting to €80 million, are expected to soar in the coming year.
If the Government of the Republic is concerned that public expenditure has been increasing faster than GDP growth for two consecutive years, one can only imagine the gravity of the situation in the Azores.
Without substantial structural reforms, without sufficient resources of our own, without innovative ideas capable of stimulating economic growth, with tourism in decline, an economy that has been cooling for several consecutive months, and a foreseeable contraction in consumption, the road ahead grows increasingly narrow for families and businesses alike.
The protests and demonstrations now unfolding in the streets of several countries are the consequence of this relentless pressure upon citizens’ finances and the absence of profound reforms across numerous sectors of society.
Extremist movements thrive in precisely such circumstances. And when governments remain unmoved and complacent in the face of mounting unrest in the streets, unable or unwilling to interpret the warning signs, they ultimately risk being swept from power.
An outraged citizen cares little about who may come next, persuaded that nothing could possibly be worse than the present state of affairs. It is in precisely this way that unexpected political upheavals emerge.
It would be wise for the political leaders of the Azores to learn from the lessons unfolding beyond our shores.
Before it is too late.
Osvaldo Cabral is an emeritus journalist with over 40 years of experience covering the Azores. He was the director of RTP-A (the public television station) and the Diário dos Açores newspaper. He is a regular columnist for many newspapers throughout the Azpres and the Diaspora.
NOVIDADES will feature occasional opinion pieces from various leading thinkers and writers in the Azores, providing the diaspora and those interested in the current state of the Azores with insight into the diverse opinions on some of the archipelago’s key issues.