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The external audit on the previous Catalan Government finances confirms a deficit previously predicted of 4.2% for 2010

The current Catalan Government, which took office last Christmas, hired an external auditor to better understand the state of the public finances. Deloitte has increased the Government’s deficit for 2010, from 3.86% to 4.2%, in line with the last data known and internally audited. The Catalan Minister for the Economy, Andreu Mas-Colell, explained that “one out of every three euros spent [in 2010] was not covered by tax revenues”. The main opposition party, which formed part of the previous Government and was in charge of finances, stated that their management cannot be made responsible for the deficit increase, as the deficit calculation criteria has changed.

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21 September 2011 01:48 AM

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ACN

Barcelona (ACN).- According to an external audit, the Catalan Government ended 2010 with a deficit of 4.2% of Catalan GDP, which is higher than the previously known official figure of 3.86%. It corresponds to 8,352 million euros. The Catalan Minister for the Economy, Andreu Mas-Colell, presented the external audit made by Deloitte on Tuesday. It was ordered early in 2011 to have a clear picture of the state of the Catalan public finances at the end of 2010, coinciding with the change of government. The current Executive, run by the Centre-Right Catalan Nationalist Coalition \u2018Convergència i Unió\u2019 (CiU), took office last Christmas, ending the seven years of a Left-Wing coalition formed by three parties. Deloitte\u2019s audit confirms the figure that had already been released by the State\u2019s General Intervention. Mas-Colell recognised that the report does not present any new information in relation to the picture the Government already had, and \u201Cthis is good\u201D. Therefore, the direction of the current economic and budgetary policy should not change and \u201Cthe Government is on the right track\u201D to improving the situation. Mas-Colell insisted that the current Government \u201Cwill carefully study Deloitte\u2019s recommendations\u201D. In addition, Mas-Colell stressed the efforts of the Catalan Government in reducing spending in 2011 However, according to the Finance Minister, in 2010, \u201Cone out of every three euros spent was not covered by tax revenues\u201D. The parties that formed the previous Government outlined that the audit \u201Cdoes not bring anything new to the table\u201D. In addition, the main opposition party, which was responsible for Catalan finances between 2003 and 2010, explained that the formula to calculate the deficit has changed, which explains the increase. However, the People\u2019s Party did not share this opinion and stated that the deficit increase is due to \u201Cthe ineffective economic management\u201D of the previous Government.


 

The Catalan Finance Minister Andreu Mas-Colell outlined that the incumbent Government decided to hire an external auditor to have a clear picture of the state of the public finances and that the presentation of its results is \u201Can act of transparency\u201D. Mas-Colell stressed that the audit will help the Government to restructure resources. Furthermore, he insisted that the audit confirms what the Government already knew and therefore its economic and budgetary policy should not change. He insisted that the report is good news, as the Catalan Government is on the right track to improving the situation. Mas-Colell clarified that the difference between the previously known 3.86% and the confirmed 4.2% is that the calculation formula has changed, adding budget lines that had not been included earlier for technical reasons. One of these items, which represents half of the deficit difference, corresponds to the construction of metro stations in Barcelona\u2019s line 9, which are to be paid for in several years time.

The PSC stressed that the deficit calculation formula has changed

The Catalan Socialist Party (PSC), which was in charge of the Catalan Government\u2019s finances between 2003 and 2010, stated that the deficit increase found in Deloitte\u2019s audit is \u201Cperfectly explicable\u201D. Laia Bonet, PSC Spokesperson at the Catalan Parliament, explained that the formula to calculate the deficit was changed by the Spanish Government. According to Bonet, the PSC is therefore not responsible for this deficit increase, as criteria to get the deficit numbers are different and items that previously were not included in the calculations are now included. Bonet said that when the exact final numbers for 2009 and 2010 will be known next year, the deficit number will decrease.

ERC and ICV-EUiA believe the audit \u201Cdoes not bring anything new to table"

The two other parties that participated in the previous Catalan Government, run by a three-party coalition, said that the audit \u201Cdoes not bring anything new to the table". The Spokesperson at the Catalan Parliament for the Left-Wing Catalan Independence Party (ERC), Anna Simó, justified the deficit because of the economic crisis and \u201Cthe reduction of revenues and the increase of citizen needs regarding social services, healthcare and education\u201D. Simó believes that the audit confirms what the Catalan Government already knew. The Spokesperson of the Catalan Green Socialist Coalition (ICV-EUiA), Dolors Camats considered that the audit\u2019s results \u201Care an excuse\u201D to undergo new budget cuts. Camats added that the current Government \u201Crefuses new revenue but it does not refuse cutting down [public] spending\u201D. Camats emphasised the spending efforts undergone by the previous Government to promote social spending, as a counter-cycle policy.

The PP denounced \u201Can ineffective economic management\u201D

However, the People\u2019s Party (PP) blames the former Left-Wing Government. The PP considered that the deficit increase is due to \u201Ca lack of provision\u201D and \u201Can ineffective economic management\u201D by the previous Catalan Government. The PP\u2019s Spokesperson at the Catalan Parliament, Enric Millo, stressed that the final deficit of 4.2% is 31.18% higher than the budgeted deficit for 2010. Millo outlined the need to reduce public spending, and pointed out that they will remain \u201Cvigilant\u201D to certify it.

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  • The Catalan Finance Minister, Andreu Mas-Colell, presenting the external audit's results (by A. Moldes)

  • The Catalan Finance Minister, Andreu Mas-Colell, presenting the external audit's results (by A. Moldes)