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300 million euro ‘bazooka’ of EU money is ‘good news, but not enough’ to revive Algarve’s economy

85bazooka enoughThe €300 million program to boost the Algarve’s economy, announced by the Government earlier today has been received as “good news” by most, though there are some who worry that the sum may not be enough for the region to combat the COVID-19 economic crisis as effectively as hoped.

There are those who emphasize the “recognition” of the executive situation that the Algarve is experiencing, but also those who speak of the sum as mere “crumbs”. Local newspaper Sul Informação released an article in which they spoke with associations and entities linked to tourism, businessmen, as well as an academic economist to get reactions to the specific €300 million program of that Brussels has aimed towards the Algarve.

For Vítor Neto, president of NERA – the Business Association of the Algarve Region, this money will be “very important” if it is “used wisely and if there is a sense of opportunity and management capacity”. In his opinion, the Algarve has a “structural imbalance” with an economy based on tourism, which weakens the region. “Years ago we abandoned the land and the sea”, he exemplified. That is why, as Neto defends, we should use this amount to “reinforce our productive structure. Continue to bet on tourism, but reinforce” elsewhere also.

“300 million euros is what the Algarve received in the last community framework. This amount can be integrated with the other European funds that will continue to exist. In addition, more public investment in the region also brings private investment. It will be very important to understand how we are going to divide the slices of the cake. Whether we are going to divide the slices for the various suitors or if we are going to use it in an integrated way”, he told Sul Informação. “The Algarve has 70 thousand companies, 20 thousand societies. 3500 are housing and catering companies, which means that there are many companies in other sectors that are underestimated. We have the conditions to overcome this crisis, but it is not overnight,” he added.

The Covid-19 crisis particularly affected the tourism sector. Prime Minister António Costa himself stressed this fact as justification for the specific program defined for the Algarve, which pleased João Fernandes, president of the Algarve Tourism Region (RTA).
“This is a sign of recognition that the Algarve is the region most affected, and the impact of the crisis on the engine of our regional economy”, he considered, in an interview to Sul Informação. For the RTA leader, this program is “without a doubt, good news”. “It is an additional package of 45 billion, some of that money will also come to the Algarve”.

Fernandes also revealed that the Tourism Region is “working with the Secretary of State for Tourism and Tourism of Portugal on a specific program for tourism in the Algarve, which will still be presented in the coming weeks”. “This new package is another aid,” he said.

But is it enough? Luís Coelho, president of the Regional Directorate of the Order of Economists and professor at the University of Algarve, has some doubts.

“Factually, 300 million is better than nothing, but as an economist, it seems little”, he said. In the economist’s opinion, “it is necessary to take into account that the Algarve has had, over the last few years, little investment”. “The region is suffering a lot due to the fall in tourism and, even thinking about post-summer, the 300 million will come short”, he defended.

As an example he brought up two structural possible future investments, the construction of the Central Hospital and a Foupana Dam. Coelho believes that the 300 million, in principle, “would soon be exhausted” in just those two works. For the UAlg professor, the region must think both of the “short term, trying to save the productive structure that we have linked to tourism”, as well as to start “a discussion about the diversification of the Algarve’s economy”, looking at investments in “sustainable energy and at the sea”.

Further, on the topic of tourism, even Elidérico Viegas, president of the Association of Hotels and Tourist Enterprises of the Algarve (AHETA), sits on Coelho’s side, admitting that this is “little money for the dimension of the problem”.