Politics

In order to attain liquidity and taking into account the difficulties getting money from the international markets, the Catalan Government is selling 2.7 billion euros worth of treasury bonds. These will be bought by citizens at bank branches. One-year bonds have a 4.25% interest rate while for two-year bonds it is 4.75%. At the end of the first day of sales, 29% of the bonds were sold. The measure was already taken last October by the previous Government and the totality of the bonds were sold quickly.

The budget austerity measures and the reduction of the public deficit have forced the restructuring of the Catalan Government’s offices abroad and have also impeded the opening of new ones. The Catalan Vice President Joana Ortega explained these changes to the Catalan Parliament’s External Action and European Union Committee.

The leader of the Conservative and Spanish Nationalist People’s Party visited the Catalan Parliament today. There, he supported the Catalan Government’s claim and asked Spanish Prime Minister Zapatero to fulfil his legal obligations towards Catalonia and pay the money his Government owes.

In the last elections, the elimination of the tax was one of the main promises of the Centre-Right Catalan Nationalist Coalition, Convergència i Unió (CiU), which controls the Catalan Government. From January 1st 2011, first and second degree relatives will have a 99% bonus on this tax. The decision has been taken in the middle of the debate about public expenditure cuts.

On the same day that Catalan hospitals presented their plans to reduce their budget by 10% and cut several services, the Catalan Government’s Spokesperson sent a strong message to Madrid saying that "enough was enough." The Spanish Government answered the calls by the Catalan Executive by saying that if it does not meet the 1.3% deficit objective for 2011, it will run out of cash. Madrid is asking for greater budget cuts. Almost all Catalan political parties, including the People’s Party, back up the Catalan Government, the main exception being the Socialist Party, which supports Prime Minister Jose Luis Rodriguez Zapatero.

The Spanish Government demands an additional budget reduction of 3.2 billion euros to Catalonia, while the Catalan Government claims 3.3 billion owed by the Spanish State. Catalan parties have accused Prime Minister Zapatero of reducing his government’s deficit by increasing that of the autonomous communities. The Spanish Government wants to force Autonomous Communities to pay for the deficit by limiting it through specific laws.

The President of the Catalan Government Artur Mas announced in Madrid that in 2012, if the People’s Party (PP) or the Socialist Party (PSOE) want CiU’s support to form a new Spanish Government, Catalonia needs more money and greater control over its own finances. Mas made these comments the same day his Government agreed a 400 million euros loan.

Catalan political parties will meet with social and economic agents to discuss how best to boost the Catalan economy. The Advisory Council is made up of academic experts and members of the business community. They drafted the report as a basis for discussion. Among many measures, they recommend partially paying for extra public services or reducing the number of public employees.

The ruling coalition Government promised the immediate abolition of the Inheritance Tax in the last election campaign; however the public finance situation has complicated the move. The Catalan President took the floor to stress that his Government is preparing a radical modification of this tax system. He wanted to stop the debate launched on Sunday by the Government’s Secretary.

The Bank of Spain today released the debt of the Spanish Autonomous Communities. Catalan public debt represents 16.2% of Catalonia’s GDP and increased 36.7% in one year. The new Catalan Government stressed its austerity and stability plan, which will cut public expenditure by 10%.

The Spanish Government will invest 25.4 billion euros up until 2020 in this strategic railway infrastructure for goods transportation that will link Spain’s Mediterranean seaports with Central and Northern Europe. The European Commission has to decide in the next 3 months whether the transport axis is a European priority.

Experts in economics and regional fiscal redistribution concluded at a conference in London that the Spanish Autonomous Communities’ expenditure like Catalonia’s is not to be blamed for the downgrading of Spanish debt. They stated that the Catalan Government can not only be “an expenditure agency” and that it needs total control over its revenues and budget.

After the Spanish Governments announcement to reduce the price of local train tickets by 5% with the aim of fostering public transportation to save fuel, the Catalan Government, which manages the service in Catalonia, quantified in 26 million euros its loss in 1 year. Therefore, the Catalan Executive refused to pay for the measure. The Spanish Government will pay 6.75 million euros for 3 months of the measure.

The President of the European Commission José Manuel Barroso met with the President of the Catalan Government Artur Mas in Brussels. Barroso recognised the Catalan Government's efforts to reduce public deficit. Mas emphasised the importance of making Catalan an official EU language. Mas was accompanied by the Christian-Democrat Josep Antoni Duran i Lleida and the new Catalan Delegate to the European Union, Joan Prat.

Spain saw 2010 end with 9.24% of public deficit; 4.97% corresponds to the Spanish Government, 3.39% to the autonomous communities and 0.64% to the local administrations. According to the Spanish Government, half of the autonomous communities saw the year come to an end far away from the objective of 2.4% - Catalonia included. The Catalan Government emphasised that the Spanish Government cut down the revenues of the autonomous communities.