Marbella Mayor Announces Loan Repayment Extension
This morning in Marbella, Mayor Ángeles Muñoz and Carolina España, the Minister of Economy and Finance, announced an agreement to extend the repayment of a loan granted to the city council by the Junta in 2006. The repayment period has been extended until 2047, a move that is expected to provide some financial relief to the city. This is part of a financial adjustment plan aimed at securing a new loan and settling adverse court judgments.
Details of the Agreement
Muñoz enthusiastically presented the agreement, which involves extending the repayment period by an additional 20 years beyond the last granted term. This pertains to the refundable advance given after the Malaya operation. As reported by Marbella24horas last September, this measure was included in the adjustment plan submitted to the Ministry of Finance to secure an €18 million loan through the Order Fund.
New Regulations and Financial Implications
The new regulations, which came into effect on January 1st, also stipulate a reduction in interest to 1% and allow the city council to request a three-year grace period. This move is necessitated by the aforementioned adjustment plan and is crucial to providing financial relief to the municipal coffers. The Order Fund will need to be repaid a total of €58 million, as an additional €40 million had been requested previously. The city’s debt has skyrocketed in recent years, particularly this debt to the Ministry of Finance, necessitating measures to ensure repayment.
Additional Measures and Reactions
In addition to renegotiating with the Junta, the city also plans to increase the Property Tax (IBI) to raise more funds. Muñoz, in the presence of Minister Carolina España, proudly announced the agreement and justified it with much fanfare. The mayor explained that this will result in savings of nearly €4 million for the municipal coffers in this term with respect to interest. However, instead of making payments as planned until 2027, payments will now need to be made for an additional 20 years.
History of the Refundable Advance
On October 20, 2006, with Manuel Chaves as president of the Junta, Law 5/2006 was published, granting the municipality of Marbella an extraordinary treasury advance of €100 million. The aim was to ensure the survival of the city council, which had been dissolved for corruption following the Malaya operation and was under the control of a Management Board. A 10-year repayment period was established, ending in 2017. With the arrival of the tripartite government team at the city council in 2015, negotiations with the Junta were reopened to ease the repayment of the final years, which was very costly. Through the 2016 budgets, the 2006 law was amended, extending the repayment period by another ten years, until 2027. Now, through the 2024 budgets, it has been extended by another twenty years, until 2047.
Adjustment Plans
In 2021, the city council had to approve an adjustment plan that included a two-year grace period (2022 and 2023) in the repayment of the refundable advance to the Junta. As a result, the outstanding amount is €41 million, which will begin to be repaid in three years, after the new grace period. It should be noted that the city council has had to request two loans from the State Order Fund, one of €40 million and now another of €18 million. The reason is the need to pay adverse court judgments that had not been anticipated by the government team.
