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The Spanish Prime Minister and the Catalan President secretly met and agreed to relax the deficit targets

According to Catalan and Spanish Government sources, the Spanish Prime Minister, Mariano Rajoy, and the President of the Catalan Executive, Artur Mas, secretly met this week in Madrid. They mainly talked about the deficit targets for 2013 and Catalonia’s self-determination process. It is the first time they have held a meeting in the last 6 months. On the first issue, they agreed on the need to relax the current 0.7% deficit objective, which would oblige the Catalan Government to carry out a budget adjustment of almost €4.5 billion. No specific figure has been decided on, but Mas said that it will be between 1.5% and 2%, depending on the European Union’s decision regarding Spain’s total deficit. Regarding the self-determination vote, they see things very differently and Rajoy continues to refuse to allow such a vote.

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27 March 2013 08:29 PM

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ACN

Barcelona (ACN).- On Wednesday it became known that the Spanish Prime Minister, Mariano Rajoy, and the President of the Catalan Executive, Artur Mas, secretly met this week in Madrid. It is the first time they have held a meeting in the last 6 months, since September\u2019s encounter when Rajoy rejected discussing a specific economic agreement for Catalonia. The meeting is in line with the new attitude of both governments to increase dialogue and explore ways to solve the most pressing matters. According to Catalan and Spanish Government sources, in the recent meeting Rajoy and Mas mainly talked about the deficit targets for 2013 and Catalonia\u2019s self-determination process. Regarding Catalonia\u2019s hypothetical independence from Spain, they see things very differently and Rajoy continues to refuse to allow any kind of self-determination vote, while Mas would like it to happen next year. Nonetheless, they decided to keep an overall civilised attitude towards this issue, in order not to interfere in other matters. On the fiscal issues, both of them found some points of mutual understanding. They agreed on the need to relax the current 0.7% deficit objective for Catalonia, which would oblige the Catalan Executive to carry out a budget adjustment of almost \u20AC4.5 billion in a context of economic recession. They did not set any specific deficit objective, as it will also depend on how much the European Union relaxes Spain\u2019s total deficit. However, Mas would like it to be in line with the Catalan Government\u2019s spending responsibilities and therefore be more than a third of the global deficit target allowed to Spain. With the current 4.5%, Mas would like the Catalan Executive\u2019s deficit target to be 1.5% of Catalonia\u2019s GDP. However, if Brussels finally allows a total deficit of around 6%, Mas would like the Catalan Government to have a 2% deficit objective for 2013.


Unfreezing the relationship between Madrid and Barcelona

This meeting was the first one after Artur Mas\u2019 inauguration of his second term in office at Christmas and after the meeting they both shared last September in Madrid, when Mas proposed a specific economic agreement for Catalonia and Rajoy rejected it. However, they saw each other at some unveiling ceremonies although they only exchanged some courtesy words \u2013 such as during the High-Speed Train line linking Barcelona and France via Girona and Figueres. This week\u2019s meeting seems to be in line with the unfreezing process that started a few days ago between both governments in order to at least talk and try to solve the most pressing issues, considering the extremely delicate situation of public finances and the economic recession.

The massive Catalan independence demonstration was a milestone

The situation gradually became more tense over 2012, when the Spanish Government started to pass laws recentralising powers and announced initiatives against the Catalan language. However, the clearest milestone was the 1.5-million strong demonstration in Barcelona supporting Catalonia\u2019s independence from Spain, on Catalonia\u2019s National Day (11th of September, 2012). Mas backed it \u201Cat a personal level\u201D and the party he leads \u2013 the Centre Right Catalan Nationalist Coalition (CiU) \u2013 also supported it. Furthermore, the Catalan President also put himself at the forefront of Catalan nationalist claims. After the demonstration, and with the atmosphere already very tense, Mas proposed to the Spanish Government a specific economic agreement for Catalonia but Rajoy refused to even talk about it. In response, Mas called for elections asking for an \u201Cexceptional majority\u201D to lead the self-determination process. Meanwhile, the Spanish Government and Spanish Nationalism started an offensive against Catalonia\u2019s self-determination process on many fronts, including the economic asphyxiation of the Catalan Executive and dirty tricks interfering with November\u2019s electoral process. Six months after the independence demonstration both governments are trying to re-build bonds and re-establish a climate enabling negotiation and problem-solving.

Continuing with fiscal consolidation efforts

During this week\u2019s meeting, Rajoy and Mas talked about the economic situation in Catalonia, Spain and Europe, and they both agreed on the need to continue with the fiscal consolidation efforts. They celebrated the reduction of the Catalan Government\u2019s deficit over 2012, dropping from a 4.02% deficit by the end of 2011 to a 1.96% by the end of December. This represents a reduction of more than two percentage points in only one year.

In addition, they also discussed the Catalan Government\u2019s lack of liquidity due to the closed access to international markets. They have assessed the functioning of the Liquidity Fund for the Autonomous Communities (FLA), which is the Spanish Government\u2019s mechanism of loans to provide them with liquidity. Both of them agreed on the need to repeat the implementation of mechanisms guaranteeing liquidity. In addition, they also agreed on the need to implement policies fostering economic growth and facilitate credit to private companies.

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  • Rajoy (left) and Mas (right) at last September's meeting in Madrid (by ACN)

  • Rajoy (left) and Mas (right) at last September's meeting in Madrid (by ACN)