The Catalan Government decides to take the Spanish Executive to court for not paying €759 million

Barcelona (ACN).- The outgoing Spanish Government is refusing to pay Catalonia €759 million from 2008, an amount promised to be paid in 2011 on several occasions. The Catalan Government has therefore decided to take the Spanish State to court. The decision was announced on Tuesday by the Spokesperson for the Catalan Government, Francesc Homs, after the weekly Cabinet meeting. In addition, Homs said that the Catalan President, Artur Mas, has given instructions to communicate this “severe” situation, “unprecedented in democracy” to European Institutions. In fact, not receiving the money this year puts the Catalan Government’s finances in a difficult situation, since the €759 million was included in this year’s budget and it was confident it would receive the money before the end of the year, as the Spanish Government had previously stated. “The Spanish Government knows the damage this causes us”, complained Homs; “it feels like a vendetta”, he added. Not receiving the funds in December means that the Catalan Government will be short of cash at the end of the year, when many payments are due. In addition, the deficit objective for 2011 may not be reached, putting Catalonia under the spotlight of the international financial markets. For this reason, the Catalan Minister for Finance will send a formal request to the Spanish Ministry of Economy and if in one month the money has not been transferred, the issue will be taken to court. The main parties in Catalonia support the Catalan Government except the People’s Party, who will run the Spanish Government from next week. The “number two” of the Centre-Right Catalan Nationalist Coalition ‘Convergència i Unió’ (CiU), which runs the Catalan Government, met with Mariano Rajoy at the Spanish Parliament on Tuesday. Rajoy, who will become the next Spanish Prime Minister, said that he is not aware of the issue, according to CiU, and he wants to wait until after taking office, when he will have a clearer picture of Spain’s financial situation.

The Spanish Government is legally obliged to pay

The €759 million that is to be paid by the Spanish Government corresponds to a point included within the Catalan Statute of Autonomy, which represents Catalonia’s “Constitution” and it has been approved by the Spanish Parliament. It foresees economic compensation to be paid by the Spanish Government for an historical lack of investment to build transport infrastructure in Catalonia. It does not specify the amount and, in fact, there have been some arguments regards the exact formula to calculate the specific amount. In addition, the money had to be paid in 2008, but it was never transferred. Finally, the Spanish Government proposed the amount to be €759 million, and it was accepted by the Catalan Government. In February of this year, the Spanish Vice President for Economy, Elena Salgado, stated before the Spanish Parliament that the money would be paid in 2011. Those promises were repeated during the year, but the money was never transferred. The Catalan Government included the €759 million in its 2011 budget. Therefore, when the Spanish Government announced last week that it would not pay this quantity because it is leaving office, there was shock in Catalonia.

Not receiving €759 million to which Catalonia is legally entitled creates financial problems

Without this significant amount of money, the Catalan Government’s budget has been put under severe stress for two main reasons. The first is that, at the end of the year, the Catalan Executive has to make many payments, such as the staff Christmas bonus or annual payments to service providers. Therefore, without the funds, the Government will be short of cash this month, and some payments may have to be postponed several weeks. Secondly, a sudden decrease of €759 million announced in December leaves very little room to correct discrepancies and thus avoid a deficit increase. The Spokesperson for the Catalan Government, Francesc Homs, said that the Spanish Government’s failure puts the Catalan deficit objective at risk. Homs said that the Catalan Government’s deficit might subsequently increase by 0.3% or 0.4%, and therefore not meet the objective of 2.66%. However, the Catalan Government insisted that the 1.3% deficit objective for 2012 will be met.

Opposition parties support the Catalan Government

The majority of the opposition parties are giving their support to the Catalan Government’s claim. The Catalan Socialist Party, which is part of the outgoing Spanish Government, expressed its support to the Catalan Government and its decision to take the issue to court. However, the People’s Party, who will be running the Spanish Government from next week, has been cautious and did not express its support. “Does somebody think this is the best way to begin a relationship with the new Spanish Government?” asked the Spokesperson for the People’s Party (PP) at the Catalan Parliament, Enric Millo.