Portugal launches probe into Madeira’s hidden debts

Portugal has launched a probe into undeclared debts run up by the autonomous Madeira region, attorney general Fernando Pinto Monteiro said Wednesday.

“I have ordered the launch of an enquiry to establish the existence of eventual legal violations,” he told reporters.

Portugal’s central bank and the national statistics institute last week said Madeira, which was granted autonomy after a 1974 revolution that unseated dictator Antonio Salazar, had hidden debts of 1.65 billion euros ($2.26 billion) run up between 2008 and 2011.

The revelation has made waves in Portugal, a eurozone member which has been rescued from a debt crisis and is fighting for growth while it enacts deep budget cuts to avail a 78-billion-euro loan.

Prime Minister Pedro Passos Coelho has said the irregularities in Madeira’s fiscal records reflected poorly on Lisbon, especially “at a moment when we are trying to set ourselves apart from countries which are facing very serious problems like Greece.”

But he said the aim to limit public deficit to 5.9 percent of Gross Domestic Product this year would not be affected as Madeira’s debt “will not have a significant impact on the accounts for 2011.”

Madeira is a major tourist destination drawing visitors all year round. The Atlantic Ocean archipelago includes the islands of Madeira, Porto Santo, the Desertas and the Savage Islands.