andreu mas-colell

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.

The left-wing independence party ERC has joined the governing centre-right pro-Catalan State coalition CiU in allowing the Catalan Government’s budget bill for 2015 to continue its parliamentary approval process. Although critical of the budget proposal, the ERC backed the centre-right coalition in the hope that Catalan President and CiU leader Artur Mas will call early elections in the coming weeks, which are likely to be transformed into a ‘de facto’ referendum on independence. The CiU and the ERC have a different approach towards any such elections and have been negotiating for a number of weeks. The approval of the 2015 budget has become an additional element of the talks, a fact which has been criticised by the other parties. On Thursday, the CiU and the ERC rejected the full amendments filed by the rest of opposition parties. 

The Spanish Finance Minister, Cristóbal Montoro, has announced new measures “to reduce the interest rates” paid by the Autonomous Community governments, including that of Catalonia. A few hours early, Spanish Finance Ministry sources told the CNA that the interest rates of the loans given to the regional governments through the Liquidity Fund (FLA) and the fund to pay providers would soon be lowered to 0%. Instead of modifying the pre-crisis-designed inter-territorial funding scheme, which legally expired a year ago, or authorising the Autonomous Communities to address the financial markets, the Spanish Government has been issuing loans with high interest rates to fund the regional executives. The Catalan Finance Minister, Andreu Mas-Colell, was sceptical about the announcement and urged the Spanish Government to approve a new inter-territorial funding scheme.

The Catalan Government is now managing the sale of the 150 hectares owned by La Caixa on which the BCN World holiday resort should build its 6 macro-casinos. On Thursday the bank and the Catalan Executive signed the agreement, which comes the day after the private investor Veremonte announced it was postponing the land purchase once again. Veremonte had an exclusivity agreement to buy 500 hectares of land before December 10 at midnight for €380 million, but it postponed the purchase because the urban planning details were still unknown. However, the core of BCN World's project, which is the 6 Las Vegas style hotels and casinos as well as a luxury shopping mall, only takes up 150 hectares. The Catalan Government decided to jump in to strengthen the project and guarantee that the main plots will be available for private investors to build the casinos. It will manage the sale for the next 18 months, while the definitive and detailed urban planning for the area should be approved in July 2015. The other hectares will be directly sold by La Caixa.

Veremonte has decided not to buy the land to build the macro-casino and holiday resort yet and it will wait until it has a better knowledge of the town-planning project's details, which are currently being defined by the public authorities. The main company behind the holiday resort had an exclusivity right to purchase some 500 hectares of land from a Caixabank's subsidiary until December 10 at midnight for €380 million. Veremonte has confirmed it will continue to work on the $6 billion BCN World project with Hard Rock, Melco, Value Retail, Melià and Caesars Entertainment and it could buy the land at a later stage. After knowing about Veremonte's decision, the Catalan Government announced it had reached an agreement with Caixabank to manage the purchase of 150 hectares of land during 18 months at no cost, allowing other companies to buy some plots. They have also confirmed that the project will carry on, "with or without Veremonte". The first version of the town-planning project should be issued in later January and the definitive version should be approved during the summer months, in order to allow construction as from autumn 2015. 

The Catalan Government presented on Tuesday its budget proposal for 2015, which has a €22.48 billion spending but only a €19.98 billion revenue. The Catalan Finance Minister, Andreu Mas-Colell, insisted that spending cannot be further reduced since no further budget cuts can be implemented without seriously damaging public services. In fact, the current budget keeps social spending levels of 2014, which represent 71.2% of the new budget. In addition, public employees' full salary will be restored, after it had been lowered for the last 3 years. The 2015 budget posts a 0.7% deficit (€1.44 billion). However, there is a €2.5 billion difference between spending and revenue that should mostly be covered with €2.19 billion from Spanish Government's pending debts. However, Mas-Colell does not rule out being granted a higher deficit target, since the current one is "unfair" and is not in line with the Catalan Government's austerity measures already adopted. Furthermore, the Spanish Government has reduced funds from the regular funding scheme by 10.7% between 2013 and 2015, a €2 billion reduction, despite the economy is recovering. 

The European Commission has warned Spain about its budget for 2015 and the possibility of meeting the global deficit target of 4.2%. It has asked the Spanish Government to adopt the necessary measures to guarantee that the 2015 budget will respect the Stability and Growth Pact. The Spanish Minister for the Economy answered back and affirmed that no additional measures will be adopted since the planned budget and the forecast economic growth “are enough”. The Commission also demanded that the Spanish Government put “more pressure” on the Autonomous Communities that will not meet their deficit target for 2014, which is likely the case of Catalonia. Brussels directly asked for the implementation of “corrective measures” in these cases. However, the Commission did not make any comment on whether such deficit targets unilaterally imposed by Madrid are fair or realistic. In fact, the Catalan Finance Minister accused the Spanish Government of putting the blame on the Autonomous Communities and “discrediting” them, in order to recentralise powers. 

Andreu Mas-Colell, the Catalan Government's Minister for Finance, emphasised that he cannot implement further budget cuts without "severely deteriorating" basic public services. After Catalonia's ministerial spending having dropped by an average of 20.3% with continuous budget cuts since 2010, public spending reduction has reached its "limit", argued Mas-Colell. The Catalan Government has exclusive control over public healthcare, education and social policies, while most of its revenue depends on transfers from the the Spanish Executive, which collects the taxes paid by Catalan citizens. Once again, Mas-Colell accused the Spanish Government of "strangling" Catalonia's finances by recentralising power. He announced he will not carry out an additional €3.3 billion budget reduction in 2015 and asked Madrid to honour pending debts, modify the too-strict deficit targets and review Catalonia's funding scheme.

In 2015 the employees of the Catalan Government and related institutions and public companies will receive their full salary once again after having suffered a 7.5% reduction over the last 3 years. The Spokesperson for the Catalan Government and Minister for the Presidency, Francesc Homs, announced the measure on Tuesday, after the weekly Cabinet meeting. Furthermore, the Executive will also stop the 15% reduction of working hours and salary of temporary workers in the public sector. Those austerity measures were approved in the 2012 budget as a drastic way to cut public spending in order to reduce the public deficit. The Spanish Government has been unilaterally imposing strict deficit targets on the Catalan Executive while it maintained an unfair inter-territorial fiscal scheme with Catalonia and reduced its resources. In fact, the Spanish Government and most of the other Autonomous Communities did not reduce public salaries in the worst years of economic crisis, while the Catalan Government was the first one to launch the ambitious austerity plan.

On Thursday, the Catalan Finance Minister, Andreu Mas-Colell, admitted that Catalonia will not be able to meet the strict 1% deficit target imposed by the Spanish Government for 2014. In fact, the Catalan Executive had previously warned on several occasions that this deficit target was not realistic, despite the great austerity efforts undertaken over the past four years. In addition, despite Spain's economic recovery of 2014 – which is led by Catalonia – and therefore the increase of taxable activity, the Spanish Government will reduce the Catalan executive's funds by €500 million this year while the deficit target becomes stricter. On Wednesday, the Catalan President, Artur Mas, already stated that, considering the austerity measures adopted since 2011, further budget cuts cannot be undertaken in 2014 without dramatically damaging basic public services such as healthcare and education. Instead of relaxing the deficit target or transferring pending funds and debts to the Catalan Government, the Spanish Finance Ministry will reduce the interest rate that the Autonomous Communities have to pay back to 1% for the loans of the Liquifidity Fund (FLA).

Catalan politics and society are shocked after Jordi Pujol, President of the Catalan Government between 1980 and 2003, confessed on Friday evening that his family had €4 million in Andorra for 35 years which had never been declared to the tax authorities. Madrid-based media and politicians have immediately linked Pujol's scandal to Catalonia's self-determination with the aim to delegitimise the process since the retired politician had been the historical leader of the conservative Catalan nationalists. Parties supporting self-determination have distanced themselves from Pujol, including CDC, the Liberal party he founded in 1974 during Franco's dictatorship that now runs the Catalan Government. It is expected that Jordi Pujol (84) will resign as CDC's Founding President in the next few hours. His confession comes after his family and particularly two of his sons have been targeted by the media and judicial investigations for corruption since 2012.

On Friday, the Spanish Government reacted to the publication by the Catalan Executive of the so-called "fiscal balances" for 2011, which calculate how much money citizens from Catalonia paid in taxes to the Spanish Government and how much they received back in terms of services, grants and investments. After the weekly cabinet meeting, the Spanish Deputy Prime Minister, Soraya Sáenz de Santamaría, stated that the Catalan Government is "making the calculations" that "interest for a political message". "All the elements have to be put on the table and with maximum transparency", she added. The Spanish Executive only published those figures once, in 2008 with data from 2005, not respecting the successive requests from Parliament and transparency standards. The Catalan Government has been calculating these figures for the last years, following the advice of independent university experts. Between 1986 and 2011, Catalan gave away an average of 8% of Catalonia's GDP each year, an amount representing €16 billion per year in today’s money.

The Catalan Government issued on Thursday its own calculation of the so-called fiscal balances with the latest data available, which is from 2011. In that year, Catalans funded services and infrastructure in the rest of Spain for €15 billion, equivalent to 7.7% of Catalonia's GDP or €2,055 per citizen, using the monetary flow formula. Using the tax-benefit method, Catalonia contributed €11.1 billion, equivalent to 5.7% of its GDP. The two methods are "complementary", as the Catalan Finance Minister, Andreu Mas-Colell stated, although the first one makes less assumptions and is closer to reality in times of economic crisis and high unemployment. "Catalonia is a net and generous contributor" to the whole of Spain, he said. In fact, the figures for 2011 confirm Catalonia's "sustained" negative "fiscal balance" for the 1986-2011 period, with an average 8.0% fiscal deficit. This has been for decades a very sensitive issue in Catalan and Spanish politics, and even more considering the self-determination debate.

Catalan Government announced its provisional budget deficit for 2013, equivalent to 1.97% of Catalonia’s GDP. The figure is above the 1.58% deficit target imposed by the Spanish Government, although it represents a reduction of €526 million on the 2012 results. In fact, the Spanish Government has praised Catalonia’s “significant” deficit reduction. The Catalan Finance Minister, Andreu Mas-Colell, was “satisfied” with the deficit obtained in 2013, since he considers the fiscal consolidation effort imposed on the Autonomous Communities, which exclusively manage around 35% of Spain’s total public spending, “out of proportion”. “It is about time that the Central administration [Spanish Government] gets slimmer”, said Mas-Colell. The Spanish Government, responsible for 50% of Spain’s total public spending, posted a 4.33% deficit, instead of the 3.8% it had granted itself.