The Spanish Government will study Catalonia’s petition for a temporary loan if the Liquidity Fund is not in place yet
The Catalan Finance Minister, Andreu Mas-Colell, asked the Spanish Government to set up a temporary short-term loan system if the announced Liquidity Fund for the Autonomies is not in place this September. The Catalan Government has been insisting on the urgent need to define and put into force this financial tool to provide the Autonomous Communities with liquidity now their access to international financial markets is impossible as they face unsustainable interest rates. In addition, Mas-Colell stated that it is very likely that more budget cuts will be needed in 2013 to meet the 0.7% deficit target. He also criticised the Spanish Government for imposing stricter deficit objectives for the Autonomies while Brussels gives Spain greater flexibility.
Barcelona (ACN).- This Monday the Catalan Finance Minister, Andreu Mas-Colell, asked the Spanish Government for a temporary short-term loan system if the announced Liquidity Fund for the Autonomous Communities is not in place this September. The Spanish Finance Ministry answered Mas-Colell by stating it will study the “temporary loan”. In an interview with the Catalan Public Television Broadcaster ‘TV3’, Mas-Colell stated that “everything points to” further budget cuts being needed in 2013 to meet the 0.7% deficit target. These “further budget adjustments” will be very likely to happen if the Spanish Government does not rectify the situation and allow the Autonomies greater flexibility regarding its deficit targets. Mas-Colell criticised the Spanish Government for not sharing the 2012 and 2013 deficit target flexibility allowed by Brussels with the Autonomies and for obliging them to meet a 0.7% deficit target in 2013 instead of the 1.1% previously set for next year.
In this Monday’s interview Mas-Colell insisted that the Catalan Government will meet the 1.5% deficit target for 2012, but that it is “very likely” further budget adjustments will be needed for 2013, since the Spanish Government made the deficit targets stricter. Mas-Colell criticised once again the Spanish Government for not having shared the flexibility allowed by the European Union with the Autonomies. Brussels allowed Spain to have a global public deficit of 6.3% of the country’s GDP this year, instead of 5.8%. However, the Spanish Government did not split the deficit difference with the rest of government levels, and kept the deficit target for the Autonomies at 1.5%. Furthermore, it made the deficit target for 2013 stricter, passing from 1.1% to 0.7%, despite that the Autonomies are responsible for almost 40% of Spain’s entire public spending.
Mas-Colell insisted on the urgent need to put in place the Liquidity Fund for the Autonomies or to find a temporary alternative to guarantee the Autonomies will not run out of cash. Catalonia requested €5 billion from the fund last week to meet all its financial obligations until the end of the year. On previous occasions the Catalan Government has insisted on the urgent need to define and activate this financial tool. This fund should provide the Autonomies liquidity in a context where they cannot access international financial markets because of unsustainable interest rates. The Spanish Government has answered Mas-Colell this Monday and insisted it will not abandon any Autonomous Community. The Spanish Finance Ministry stated the Liquidity Fund will be in place in a matter of “days or weeks”.