Court of Auditors claims €5.4m from Catalan former officials over independence push
Puigdemont, Junqueras, Mas and Mas-Colell among politicians facing largest sums
Puigdemont, Junqueras, Mas and Mas-Colell among politicians facing largest sums
Joseph Stiglitz is among those supporting Mas-Colell, accused of irregular public spending despite retiring two years before referendum
Some 20 advisory council members hope activities of the organization “will resume soon”
The Spanish Finance Ministry transferred this morning 3 billion euros from the Spanish Liquidity Point (FLA) corresponding to Catalonia. However there is still 34 million pending to be transferred due to the Ministry’s “invoices checking” procedure. The payment of this 3 billion euros from the FLA comes after the controversial "specific and additional controls" that Spain's executive has imposed on Catalonia to guarantee "transparency" and ensure that “the FLA won’t fund pro-independence whims”, in the words of Spanish Finance Minister Cristóbal Montoro. The 3.034 billion euros assigned this year to Catalonia includes the 2.6 billion euros outstanding from 2014’s FLA, which the Catalan government repeatedly asked for in order to pay pending debts, such as those from pharmacies and medical centres.
The Spanish Bank Association (AEB in Spanish) and the Spanish Confederation of Saving Banks (CECA in Spanish) warned about the “risks” of Catalonia’s independence. In an official announcement made this Friday, both associations assured that all banks with a presence in Catalonia “would face severe problems of judicial insecurity” in the event of a Unilateral Declaration of Independence after the 27-S elections. They outlined that “any political decision which would imply breaking the rules in force” would result in “exclusion from the EU and the Eurozone” for Catalonia. The Catalan Finance Minister, Andreu Mas-Colell, described the Spanish government as “being irresponsible” for pushing the banking sector to be against the independence of Catalonia. He regretted that such “a delicate sector” was used as an “artillery weapon”.
Despite the fact that all the Autonomous Community governments that are not run by the People's Party (PP) requested the Spanish Executive – run by the PP – to allow them a greater deficit in 2016 and that Spain's independent fiscal authority Airef also recommended granting regional governments greater deficit targets for next year, the Spanish Finance Minister, Cristóbal Montoro, has rejected doing so. In 2016, the Autonomous Communities will have to close their budgets with less than a 0.3% deficit, "an absurd" and "unrealistic" figure according to the Catalan Finance Minister, Andreu Mas-Colell, who was recently awarded an honorary PhD in Economics by the University of Chicago. The Catalan Government asked for a 0.88% deficit target for 2016. Besides this, next year the Catalan Executive will receive €1.2 billion that should have already been transferred by the Spanish Executive but was not, due to Montoro's tax revenue miscalculations. In addition to this, since economic activity is growing, the Spanish Government will increase the Catalan Executive's funds by €700 million each year from 2016 onwards.
The Catalan Government has sent another warning message about its lack of liquidity, which depends on the Spanish Executive’s regular transfers since most taxes are collected by Madrid-based services. The Catalan Minister for the Presidency, Francesc Homs, accused the Spanish Government of "deliberate asphyxia" and asked the rest of the Catalan parties to "pool together" to denounce the situation. According to Homs, such financial asphyxia will affect everything except salaries. All Catalan Government departments will be affected and their payments to service providers will be delayed. The Catalan Finance Minister, Andreu Mas-Colell, already warned about this financial asphyxia on previous occasions. In the coming days, Mas-Colell will meet with the rest of the parties to discuss the situation. However, the Spanish Finance Ministry rejects the accusation and has stated that it has made all the pending transfers.
The Catalan Government registered a 2.58% deficit in 2014, according to the Spanish Finance Minister, Cristóbal Montoro. The Catalan Finance Minister, Andreu Mas-Colell, already unveiled this figure a few days ago, but explained that it was including the public bailout of a highway charged on 31 December 2014, as otherwise the figure would be 2.13%. In any case, Catalonia's deficit is higher than the 1% target unilaterally imposed by the Spanish Government on the Autonomous Communities. The Catalan Government protested months ago, saying that it was not a realistic target, that it was unfair since it was not in line with spending responsibilities in the management of basic public services, and that it was went against the Budget Stability Law. The Catalan Government took it to the Constitutional Court but the verdict has not been issued yet.
The Catalan Finance Minister, Andreu Mas-Colell, has announced a €4.23 billion deficit for 2014, representing a 2.13% deficit, significantly higher than the 1% target imposed by the Spanish Government. Mas-Colell stressed that spending went as planned, but revenue was far from the expected result, obtaining €1.91 billion less than expected, since the Spanish Government reduced the Catalan Executive's funds by €600 million. In addition, it has not shared with the Autonomous Communities all the money from the revenue increase of 2014 which came due to the economic recovery. "We have not seen a single euro of this additional revenue", complained Mas-Colell, who estimated that €900 million of this money should have gone to Catalonia. In addition, he has always argued that a 1% deficit for 2014 was not realistic and that it was "illegal", after filing a complaint to the Supreme Court.
Another positive figure has emerged to confirm the economic recovery after years of crisis. Catalonia’s GDP grew by 1.2% over the course of 2014, which are the best figures since 2007, before the financial crisis, according to early data released on Thursday by the Catalan Statistics Institute (Idescat) and the Catalan Finance Ministry. The figure is higher than the 0.9% economic growth foreseen in the Catalan Government’s budget for 2014 (approved in late 2013) but is lower than an early forecast made in March, when a 1.5% growth was predicted. Besides this growth in the Catalan economy, in Spain as a whole, the economy grew by 1.4%, according to early data released by the Spanish Statistics Institute (INE). Furthermore, the Catalan economy grew by 0.4% in the last quarter of 2014 compared to September figures and by 1.5% in annual terms. In the first, second, and third quarters it grew by 0.5%, 0.4%, and 0.3% respectively (in quarterly terms).
The Catalan Government has formally requested €9.46 billion in loans from the Liquidity Fund for the Autonomous Communities (FLA), run by the Spanish Finance Ministry, to face debt payments and other obligations during 2015. This is the only way that the Spanish Government authorises the Catalan Executive to request liquidity as it has banned Catalonia’s access to financial markets to obtain additional funds, as many governments do when they issue bonds or ask for loans. Therefore, the FLA has become the Catalan Executive’s only bank and a source of funds that must be returned. However, for the first time this year, the Spanish Government will not make money on the FLA and has set a 0% interest rate, which will have a €300 million positive impact on the Catalan Executive’s budget.
Following the agreement reached last week between the President of the Catalan Government and leader of the governing centre-right pro-Catalan State coalition CiU, Artur Mas, and the President of the left-wing pro-independence party ERC, Oriol Junqueras, on calling early elections in September as a plebiscite on Catalonia’s independence from Spain, the Catalan Executive’s budget for 2015 is now closer to definitive approval. On Monday, the ERC MPs started to withdraw their full amendments to the different sections of the Catalan Government’s budget. Now, the ERC is asking the CiU and the Government to debate their specific amendments on precise programmes in order to have “a fairer budget” which is less regional and more that of a country in its “national transition”, they said.
The Spanish Finance Minister, Cristóbal Montoro, has confirmed a new fiscal measure to increase the Autonomous Communities’ revenue, benefiting the Catalan Government as well. After the Council on Fiscal and Financial Policies (CPFF) held on Tuesday evening, Montoro confirmed that interest rates will be set at 0% for the loans given to the regional governments since 2012 through the Liquidity Fund (FLA). The measure will also be in place for 2015. However, the Autonomous Communities that have already met the deficit targets will also be granted a 0% rate for 2016 and 2017. The Catalan Government welcomes the measure but is sceptical about its details. The Catalan Finance Minister, Andreu Mas-Colell, demanded an entirely new funding scheme, since the current one expired a year ago. Montoro is not renewing the inter-territorial funding scheme and instead is using this loan system, which obliges regional governments to return the transferred funds.