Bad bookkeeping

Finance Minister Cristóbal Montoro allowed a week to go by — from Friday May 18 to Thursday May 26 — before deigning to explain the deviations of public deficit that appeared in the budgets of the regional governments of Madrid, Valencia and Castilla y León. Given that these governments — all run by the Popular Party (PP) — showed, in what appears to be an exercise in self-interested concealment, an excess deficit of three billion euros, while the Finance Ministry calculated four billion, a billion-euro difference was left unexplained.

In spite of the delay, the minister’s explanations were unsatisfactory, and suspiciously resembled a bullfighter’s dodge. The minister told the Eurostat technicians that the unexplained billion pertains to Valencia, and consists of unpaid bills brought to light by the plan for payment of suppliers. That is, the regional governments of the PP have also been keeping “bills in drawers,” as the present government disdainfully described the delayed payments in regions governed by other parties.

The worst part of the explanation is that it keeps Eurostat and the public in the dark. Because the upward revision of the deficit to 8.9 percent of GDP may not be the definitive one — which depends on the bills in those drawers, and on the predictable increase in the Valencian debt, which may amount to a billion euros more. There are more doubts surrounding the regional accounts, and the dangerous message that the government is incapable not only of squaring the accounts, but also of determining them with any exactitude. “What matters now is transparency,” said Prime Minister Mariano Rajoy when asked about the deviations. But the concealment of the real deficit in Madrid, Valencia and Castilla y León, and the absence of balanced regional accounts for 2011, are hardly examples of transparency.

The government has shown an incomprehensible levity in weighing the consequences of such significant budgetary deviations. But in Brussels they do not see anything funny about it. The cases of the three regions entitle Brussels and the investors to think there is a hidden deficit in Spain, and that the quality of public accounts is doubtful. The Catalan government’s feint of demanding the central government’s help to resolve its financial problems, and its effect on the risk premium, confirm the urgency of the need to clarify the regional accounts, and put an end to this interminable vaudeville in which new concealed debts appear day by day; concealed by administrations that made a point of their austerity.

Meanwhile, the cases of Madrid, Valencia and Castilla y León make a nonsense of any further reference to the “bad inheritance received” from the Socialists as an explanation of economic evils. Because PP governments have also contributed to foreign distrust of Spain, first with their own bad inheritance, and now with a political handling of the crisis that leaves much to be desired.