Government rejects PP pitch on regional debt

Ministry official says repayment period already "generous"

The central government on Tuesday rejected a proposal by the leader of the main opposition Popular Party, Mariano Rajoy, for a moratorium on debt repayments by cash-strapped regions to Madrid.

The secretary of state for finance, Juan Manuel López Carbajo, said the agreement reached with the regions on the schedule for money owed by them is already "generous," and that there was, therefore, "no reason" to put payments back further.

The PP now controls the majority of Spain's 17 regions after elections held in May. Rajoy's call for a moratorium came in the context of a meeting of the joint central-regional government committee on fiscal and financial policy. Rajoy had said PP representatives on the committee would seek a further extension of the deadline for payments because of their "liquidity problems."

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López Carbajo told a news conference that the timetable for the repayment of what is owed had been extended by a year to six years. "It seems there is no reason to change the system," he said.

The official said the amount due to the central government by the regions stood at 19 billion euros as of 2009.

The fiscal and financial committee meeting today will also deal with the central government's proposal that the regions take on the obligation to limit increases in spending to the average expected growth in the economy.

López Carbajo said he hoped the PP would adopt a "positive and responsible attitude" to the proposal. "There's a lot at stake for everyone," he said.