Arrecife orders the advance payment of 11.4 million and reduces the debt of the 27 million loan by 70%

The deputy mayor and councilor for Finance of the Arrecife City Council, Echedey Eugenio, has signed the payment order for 11,459,578.85 euros for the early repayment of the municipal debt corresponding to the loan arranged with the entity BBVA, according to an agreement adopted by the Arrecife City Council Governing Board on December 9, 2021.

The resolution represents taking the definitive step to make effective the payment of a substantial part of the credit operation, which initially amounted to 27 million euros and whose outstanding principal, before this extraordinary repayment, was currently 19,575,000 euros, as recorded in the municipal file itself.

With this operation, the City Council will have repaid 18,884,578.85 euros of the initial 27 million during the current term, taking into account the 7,425,000 euros already reduced to bring the outstanding principal to 19.575 million and the 11.459 million whose payment is now ordered.

This means that practically 70% of the initial loan has been reduced in this term, leaving, once the payment is made, an outstanding principal of approximately 8.1 million euros.

“Today we are signing something that probably has less impact than announcing a construction project, a party, or a concert, but which says a lot about how we are managing Arrecife: the payment order of more than 11.4 million euros of debt in one go,” highlights Echedey Eugenio.

The councilor for Finance points out that the operation allows us to put into perspective the economic evolution of the City Council during these years. “We started with a loan of 27 million euros and, with this payment, during this term we will have repaid close to 19 million. Almost seven out of every ten euros of that debt will have been returned in these four years.”

Specifically, the conditions of the credit established an amortization period of 10 years with an initial 2-year grace period in which only interest was paid at a fixed rate of 0.41%; the amortization beginning on December 31, 2023.

Zero debt at the end of the term

Echedey Eugenio points out in this regard that “if the original calendar had been maintained, the loan would not have been amortized until the end of 2033, but now everything indicates that in December we will be in a position to amortize the rest and meet our objective of closing this term with zero debt. That is to say, we are going to pay off in just 3 years what the City Council was initially going to be paying until 2033”.

In this sense, the deputy mayor and councilor for Finance of the Arrecife City Council claims that the sanitation of municipal accounts is part of a management that goes far beyond the most visible actions carried out by the City Council.

“We talk about parties, concerts, events, and everything that logically has enormous public impact, but municipal management also happens in Finance, Procurement, Auditing, and Treasury. It is also about controlling spending, complying with budgetary stability, investing, and having the capacity to repay debt,” he states.

The head of Finance for the Arrecife City Council adds that “the easy thing is to have resources today that will have to be paid by governments and generations to come tomorrow. The difficult thing is to maintain an active city, invest, provide services, and at the same time, be able to reduce nearly 19 million euros of debt in a single term”.

Solvency without halting investments

The payment arrangement occurs after the settlement of the 2024 municipal budget reflected a financing capacity of 11,459,578.85 euros and compliance with the budgetary stability objective. The file states that, in the event of a surplus settlement, budgetary stability regulations establish its allocation to the reduction of net debt. decree.docx

At the same time, the City Council maintains the economic capacity to face the planned investments. The Plenary approved on June 5, 2026, an extraordinary credit and credit supplement file for 36,828,405.15 euros, including sufficient credit to undertake the investments planned by the Corporation.

“And that is the key,” says Eugenio. “We are not paying debt because we have stopped doing things. We are paying debt while Arrecife continues to move forward, while we invest, and while we maintain the services and activity of the city. That is what gives true value to these numbers.”

The deputy mayor has especially thanked the work carried out by public employees in the municipal economic areas for making the operation possible, highlighting that “behind a signature like this there is enormous technical, administrative and economic work that is rarely seen, but which is essential for the City Council to function”.

“Signing today the order of payment of more than 11.4 million means that Arrecife will have 11.4 million less debt tomorrow. And when this term ends, of those 27 million we will have returned close to 19. That is also our management: to build a city, but to do so responsibly. Others chose to leave debt; we are working to leave a stronger City Council with more future,” concludes Echedey Eugenio.