Brussels, 24/07/2012 (Agence Europe) - Bad news never comes alone: 17 of Spain's autonomous regions stand on the edge of the abyss. After a decade of overspending, the coffers of some are empty and repayment has to be made at the end of the year. Consequently, the Valencia Region has already sought financial aid from the Spanish central government, with Madrid only just having put in place an €18 billion bail-out fund for its regional authorities. Other autonomous regions, such as Catalonia and Murcia, which find themselves in the same position, could follow Valencia's lead. Last week, the Spanish delegation in the Committee of the Regions called for Europe-wide solidarity as a complement to initiatives to reduce public deficit.
Liquidity fund. Spain, in deeper turmoil than ever, announced earlier this month that it was setting up a liquidity fund for the regions ahead of the deadlines for repayment at the end of the year, as they no longer have access to capital markets. €18 billion will be available to the regions in need, but conditions, such as adjustment plans, are strict.
Valencia leads the way. The Community of Valencia was the first of the 17 autonomous regions, on 20 July, to apply for aid from this fund, though it has given no indication of the amount being sought. The debt it has to pay back this year amounts to €2.5 billion. During the previous decade, Valencia, like other regions, spent money hand over fist on projects of doubtful usefulness, until it could no longer balance the books.
Catalonia and Murcia could be next. Murcia and Catalonia look likely to make an application for aid from the stability fund. Catalan Finance Minister Andreu Mas-Colell told the BBC that Catalonia has no other bank at the moment than the Spanish government. Application to the liquidity fund, then, is an option that has to be considered, a spokesperson told Agence France Presse. President of the Murcia Region Ramon Luis Valcarcel Siso, who has just been elected to head the Committee of the Regions (CoR) for the next two and a half years, spoke in the press last week of needs of €200-300 million. On Sunday 23 July, however, the Murcia government denied that it would have to seek assistance from the rescue mechanism. Similarly, the head of the government of Extremadura, José Antonio Monago, said at the weekend that his region faced any liquidity problems. Other autonomous regions may very well be in the red: according to the press, regions such as the Balearic Islands, the Canary Islands and Andalusia are in such difficult straits that they will have to look to the liquidity fund.
Distress signal to CoR. With the difficulties these regions are facing adding to the troubles of their country, several Spanish communities have sent a distress signal to the Committee of the Regions, seizing the opportunity presented by the election of Spaniard Valcarcel Siso to the head of the Committee. In a letter, the Spanish delegation in the CoR called for European solidarity and states that the autonomous regions are “committed to our fiscal stability and to the reduction of our public deficit”. But, it added, “in order to complement the effects of those policies of austerity and fiscal consolidation that we are currently carrying out, we urge the European Union to put forward courageous and determined Growth and Convergence Plan, making the wealthiest European States show solidarity with the less fortunate States”. (MD/transl.rt)