Spanish PM and Catalan President meet to guarantee the Catalan Government’s financing and Spanish economy’s recovery

The Catalan Government will be able to issue more public debt and the State will pay Catalonia 759 million euros that are pending from 2008. According to the Catalan Government, the Spanish Executive owes more than 2,100 million euros, although the figure could be larger. The Catalan President, Artur Mas, claimed this amount and the Catalan Government’s capacity to issue new debt, after having presented a viability and austerity plan a week ago. Both leaders discussed pending competence devolutions today regarding already approved legislation and agreements, but without concrete results. Prime Minister Zapatero was also very interested in this meeting as he wants to count on votes from Mas’ party in the Spanish Parliament. Mas confirmed that his party would support Zapatero’s measures to foster the economic recovery, such as the pension system reform agreement or a new framework for SMEs.

CNA / Gaspar Pericay Coll

February 7, 2011 11:20 PM

Barcelona / Madrid (ACN).- José Luís Rodríguez Zapatero, the Spanish Socialist Prime Minister, and Artur Mas, the President of the Catalan Government, met this evening to de-block 3 main issues: the Catalan Government’s capacity to issue new debt, the more than 2 billions the Spanish Government owes Catalonia, and the pending competence devolutions that were already approved but never actually transferred. The first two issues are extremely urgent; the other has a more important consequence in the long run. The Catalan Government needs money urgently due to the economic crisis and a series of political decisions made by the Spanish Government and the previous Catalan Cabinet. Mas set as his first priority addressing the Catalan Government’s finances. Today’s meeting with the Spanish Prime Minister was crucial for this. Mas presented his cut on public expenditure, which corresponds to 10%, as a guarantee to issue new debt to refinance old debts and the deficit. Both leaders agreed that once the Catalan viability is approved, the Catalan Government could be able to issue this debt. In addition, the Spanish Government agreed to pay 759 million euros that were pending from 2008 budget. On the other hand, Zapatero had also a great interest in today’s meeting, as he needs votes from Mas’ party in the Spanish Parliament and it is the first time he met with Mas since he became Catalan President last December. Mas confirmed to Zapatero that his party would support the Spanish Government in fostering the economic recovery. The meeting lasted about 3 hours, almost the double than expected.

For Zapatero, today’s meeting was about getting support from Mas for his new measures to fight the crisis. For Mas, the meeting was about more money and more competences for the Catalan Government. Or to be more precise: getting the money and the competences that were already agreed. This, according to the Catalan Government, means that Artur Mas went to Madrid to claim what the Spanish Government owes to the Catalan in terms of money and competence devolution. Therefore, it was not a meeting to discuss new sources of funding or new devolutions. It was a meeting to claim delayed transfers; transfers that account for more than 2 billion euros and 35 concrete competences, according to the Catalan Government. On top of this, there is the issue of the Catalan Government’s deficit and its current lack of liquidity, in part due to the Spanish Government’s blocking on its capacity to issue new debt. At the moment this capacity is on stand-by, waiting for the approval of the Catalan viability and austerity plan presented to the Spanish Ministry of Economy. However, Zpatero and Mas agreed that once the plan approved, the Catalan Government will be able to issue new debt; a debt that will be to re-finance old debt and cover the current deficit. Mas confirmed that the new debt, to be paid in the long run will be initially for 2,000 or 2,500 million euros and that further will follow.

The capacity to issue new debt

The Catalan Government at this moment cannot issue more public debt. This means that currently the Government cannot turn to the markets or to private citizens to get cash, which is a mechanism that all governments constantly do, in times of crisis and in times of prosperity. In fact, the Spanish Government temporary blocked this capacity due to the Catalan Government’s excessive deficit for 2010.

According to the Spanish Government, the Catalan Government has just spent too much money and has not tried to reduce its public deficit sufficiently. In fact, the Catalan Government had to end 2010 with a deficit of 2.4% but it did it with 3.6%. Due to this, the Spanish Government temporary blocked the Catalan Government’s capacity to issue more debt waiting for the austerity and viability plan. This plan was presented a week ago to the Spanish Ministry of Economy for its approval. It is expected to be approved in the coming days.

However, the current Catalan Government, from the Centre-Right Catalan Nationalist Coalition (CiU), states that the current situation is a responsibility of the previous Left-Wing Catalan Government and the Socialist Spanish Government. The current Catalan Government accuses the former Cabinet of spending too much money, for instance on Healthcare but it also accuses the Spanish Government of reducing its own deficit by replacing the deficit of other public administrations. Mas’ Government accuses Zapatero’s Government of not fulfilling its financial engagements and of owing more than 2.1 billion to the Catalan Government as well as having created extra expenditures by new laws at Spanish level to fight against the crisis. Therefore, in eyes of the Catalan Government, the Spanish Government is very much responsible for its current lack of cash.

Madris owes Barcelona more than 2,100 million

The Catalan Government quantifies a bill of, at least, 2.1 billion euros that the Spanish Government should have already paid to the Catalan. In addition, on top of these 2.1 billions, the Catalan Government stresses that new Spanish legislation to fight the economic crisis and face the international markets’ requirements obliged the Catalan Government to spend more money than budgeted for 2010, while revenues decreased and thus deficit was created.

The Catalan Government’s spokesperson, Francesc Homs, explained today that the Catalan Government quantifies the pending amounts in 2,109 million euros. 759 millions are from 2008, related to a lack of infrastructure investment. This quantity was de-blocked in today’s meeting and the 759 millions are expected to be transferred in the weeks or months to come. Then there are 1,350 millions from the competitiveness fund that had to be paid this year. However, to cut public expenditure, the Spanish Government did not place any money into this fund and thus the 1,350 million euro never arrived to Catalonia. In previous estimations, this quantity had been set at 1,000 but today Homs clarified that this figure was for 2009 and that the correct one for 2011 is 1,350 million.

Discussion on 35 competence devolutions

Finally, the last main issue discussed was related to competence devolution. According to the previous Catalan Government, taking the current legislation at Spanish level, the Spanish Government had to devolve 40 concrete competences between 2006 and 2010. The current Catalan Government states that from these 40 competences: 5 have been correctly transferred, 6 are incomplete and 29 are still pending.

Mas and Zapatero discussed these issues but, as expected, they did not reach concrete agreements. However, they decided to further discuss particular issues, like the privatisation of the Spanish Airport Authority as well as Madrid-Barajas and Barcelona-El Prat airport. Mas stressed that they do not oppose to the privatisation but they claim a Catalan determinant presence in the society directing the public competition and the one controlling the concession. At the moment, Catalan public administrations as well as Catalan private sector do not have any decision power on Barcelona’s airport, and they would not have it in the future plans licked by the Spanish Government.

On the pending competence devolutions, there is university and non-university education grants, civil protection and sea safety, personal data protection or labour accidents’ mutuality organisations. Regarding the 6 incomplete transfers there are: the short-distance and regional trains, Barcelona’s Clinic Hospital or inspection on electronic communications and telecommunications. The 5 successful competences are: labour and social security inspections, ISBN and ISSN assignation and functioning services, expedition and validation of non-university education foreign certificates, the functioning of registers, and private security education centres and activity regulation.