The councillor for Finance in Jaén, Francisco Lechuga, estimates the municipal financial debt at 597 million euros and the average payment term to suppliers at 70 days. The aim is to reduce it to below 60 days before the end of the term.
The councillor for Finance of the City Council of Jaén, Francisco Lechuga, has estimated this Monday that the financial debt of the City Council stands at 597 million euros, a figure that, he said, "does not reflect reality at all" compared to the 670 million attributed last week by the spokesperson of the PP, Antonio Losa. The information, reported by jaenhoy.es, also notes that the average payment term to suppliers currently stands at 70 days, with the goal of reducing it below 60 before the end of the term.
Lechuga has broken down the municipal debt into three parts: 597 million in financial debt, 9.5 million owed to the Junta de Andalucía, and 10 million in commercial debt. The councillor recalled that when he took on the responsibility for Finance, the commercial debt was around 30 million. "Fortunately, we are in a position to meet all payments without issue, as we have liquidity," he stated.
"Fortunately, we are in a position to meet all payments without issue, as we have liquidity"
The municipal official has focused on the evolution of the average payment period as the main indicator of the financial health of the accounts. According to his data, the City Council as a parent entity has gone from registering around 1,000 days to the current 70 days. "That is the way forward," he noted before setting the goal of reducing it to below 60 days before the end of the term, although he admitted that he cannot commit to achieving it as it depends on the reorganisation of areas such as Intervention, Treasury, and Procurement.
The councillor explained that in the early years of democracy, there was not enough documentation to accurately know the commercial and banking debt, but there are data from the terms of Carmen Peñalver and José Enrique Fernández de Moya. During that period, unpaid invoices to suppliers, both freelancers and small and large companies providing services, supplies, or works to the City Council, accumulated. "A large number of them were left in drawers and due to lack of credit or liquidity, or both, payments were not made," he declared.
According to Lechuga, this situation created a problem for suppliers and ultimately transformed into financial debt due to the state payment mechanisms for suppliers implemented in 2012. "Once the city councils were required to submit a certified list of all the invoices that were left in drawers, payment was made, and, evidently, a debt was incurred with the State," he explained.
In the case of Jaén, the councillor estimated the existing commercial debt before the implementation of these mechanisms at around 80 million euros, which later exceeded 350 million. "This represented an exponential increase, almost 300%, suddenly converting short-term debt into long-term debt. That is where this financial problem of the City Council really began," he assured.
With the Budgetary Stability Law of 2014, known as the Montoro Law, the City Council was mandatorily adhered to the Order Fund. Since then, according to Lechuga, the City Council must resort to the payment mechanisms for suppliers as long as it does not manage to place its average payment period within the established limits. "Loans that the Tax Agency advances, pays the invoice, and then that debt accumulates or materialises into a long-term loan," he summarised.
The councillor warned that as long as the City Council of Jaén does not reduce the average payment period of commercial debt to less than 60 days, and even to 30 days, "that will continue as it is." "The councillor or mayor who comes here to say otherwise is lying, because there is no other way under current legislation to avoid that situation," he added.
The reduction of the payment term to suppliers is one of the priorities that the municipal government team has set for the remainder of the term. The City Council of Jaén is working on reorganising the areas of Intervention, Treasury, and Procurement to expedite procedures and bring the average payment period closer to 60 days.
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