The Catalan Government receives the €568 million from the FLA and authorises delayed payments
The Catalan Government’s Spokesperson, Francesc Homs, ruled out the Spanish Executive deciding to delay the payment as an answer to Catalonia’s self-determination process, as it would be “malfeasance”. However, he was angry about the €24 million fine the Spanish Government has issued against the Catalan Executive for delaying Social Security payments. Homs considered this delay to be a consequence of not receiving the €568 million on time and announced an appeal to the Constitutional Court. The Catalan Government had requested €568 million weeks ago from the Spanish Government’s Liquidity Fund for the Autonomous Communities (FLA) to face some of September’s payments. However the amount did not arrive on time and payments to private healthcare, education and social centres receiving public funds were delayed.
Barcelona (ACN).- The Catalan Government received the \u20AC568 million from the Spanish Executive\u2019s Liquidity fund for the Autonomous Communities (FLA) on Tuesday and has authorised to make the payments pending from September. However, the Spanish Government, which has sent the \u20AC568 million after a delay, now imposes a \u20AC24 million fine on the Catalan Executive for not having paid September\u2019s Social Security contributions on time. The Spokesperson for the Catalan Government, Francesc Homs, was angry about this fine and said that Catalonia will appeal the decision to the Constitutional Court. According to Homs, the Catalan Government had warned it had liquidity tensions and requested \u20AC568 million from the Spanish Government\u2019s FLA in order to make September\u2019s payments. If the amount arrived on the 9th October, Catalonia could not pay the Spanish Executive the Social Security contributions on 1st October. However, Homs ruled out the Spanish Government\u2019s delay being a consequence of Catalonia\u2019s self-determination process, as it would be a case of \u201Cmalfeasance\u201D. Homs understood that the delay was because \u201Cwe all have difficulties\u201D regarding liquidity. As the Autonomous Communities have no longer access to international financial markets at sustainable interest rates, in order to obtain liquidity to face debt maturities and ordinary payments, the Spanish Government put in place the FLA in the summer, to act as a sort of bank for the Autonomous Communities. Catalonia announced that it would request a total of \u20AC5.02 billion for the rest of 2012. Paradoxically, Catalonia is at the same time Span\u2019s richest Autonomous Community, with 19% of the country\u2019s GDP. However, Catalonia suffers from a permanent fiscal deficit, contributing up to 8.5% of its GDP (almost \u20AC17 billion) to pay for services and investments made in other parts of Spain. At the same time, the Catalan Government has to undertake drastic budget cuts on public services to meet the strict deficit targets imposed by the Spanish Government.
Criticism of the situation
Managers of private social centres said they are worried about this \u201Cuncertainty\u201D. They stated that this situation is \u201Cunsustainable\u201D. They consider the payment delays to be \u201Cinadmissible\u201D as they put public services that have to guarantee basic services in danger. The leader of the main opposition party in Catalonia, the Catalan Socialist Party (PSC), Pere Navarro, accused the Catalan Government of \u201Cnot managing the liquid assets properly\u201D, although he also criticised the Spanish Government for \u201Cnot meeting its obligations\u201D and guaranteeing that the FLA has enough funds. The People\u2019s Party (PP) emphasised that the Catalan Government will be able to make payments \u201Cbecause Spain gives the money Catalonia needs\u201D. He also accused Homs of diverting attention with \u201Cfalse arguments\u201D as it is \u201Cthe Catalan Government\u2019s responsibility being a doubtful debtor\u201D with Social Security, managed by the Spanish Government. In addition, the Catalan Green Socialist and Communist Coalition (ICV-EUiA) asked for an explanation of the exact conditions for such a \u201Cbailout\u201D, which should not be \u201Ca taboo word\u201D according to them.
The payment from the FLA arrived late
As the Autonomous Communities no longer have access to international financial markets at sustainable interest rates, in order to obtain liquidity to face debt maturities and ordinary payments, the Spanish Government put the FLA in place in the summer, to act as a sort of bank for the Autonomous Communities. Catalonia announced it would request a total of \u20AC5.02 billion for the rest of 2012. Of this amount, Catalonia had requested \u20AC471 million to face September debt maturities and \u20AC560 million to face ordinary payments. The first amount arrived on time but not the second one.
Some payments to be made by the Catalan Government to private healthcare, education and social centres receiving public funds could not be issued on the 1st of October since the amount requested from the FLA had not arrived yet. The Catalan Finance Minister, Andreu Mas-Colell, urged the Spanish Government a few weeks ago about the need to receive the money on time. Mas-Colell warned that, in case the money did not arrive on time, the salaries were guaranteed but not other payments. Since the Catalan Executive could not pay part of the money owed to social organisations on time because the Spanish Government had not sent the \u20AC560 million on time, it decided to delay the payments of the Social Security contributions, managed by the Spanish Government.