Help for regions won’t harm Spain’s rating, minister says

Finance Minister Cristóbal Montoro said Monday that he does not believe that the central government’s plans to help the Spanish regions secure cheaper funding will undermine Spain’s sovereign rating.

The regions have asked Madrid to consider the issue of so-called hispanobonds that would be issued by the regions but backed by the central government, which would allow them to obtain funding at a cost similar to that of the sovereign.

“We need to introduce a mechanism that obliges the regions to assume responsibility for their finances and which does not affect the sovereign debt rating or that of regions,” Montoro said.

Montoro said the government’s decision on Friday to revise the public deficit figures for last year for all of the public administrations from 8.51 percent of GDP to 8.91 percent was probably due to the impact of a scheme to pay off longstanding bills owed to suppliers, which caused something of a blowout in some of the regions’ finances.

“We are clear on this,” Montoro said. “There is no way out other than reducing the deficit.”

Along similar lines, Economy Minister Luis de Guindos said: “For the first time in a long time, there is a commitment on the part of the regions and the central government on correcting the public deficit. It is a very important signal regarding [...] the government’s credibility in the area of fiscal policy.