Catalonia joins Valencia and Murcia in seeking help from central government

Catalonia on Tuesday said it would follow Valencia and Murcia in asking for help from the central government to overcome its financial problems.

Weighed down by debt of 42 billion euros, the economic powerhouse of Spain is struggling to pay its suppliers.

Catalonia will avail itself of “all lines of funding” made available by the central government, spokesman Francesc Homs said. “That is what we have been doing,” Homs said.

The government has already established a line of credit to allow the regions to pay off debt accumulated with suppliers. It is also going to set up a type of rescue fund of 18 billion euros for regions with funding problems because of the spike in Spain’s risk premium. Valencia has said it plans to ask for over two billion euros from that fund, while Murcia wants 300 million.

Homs declined to put a figure on how much Catalonia will ask for. The region has an economy about the size of Portugal’s, which has received a 78-billion-euro bailout from the European Union and the IMF.

Homs insisted that the funds it will seek should not be called a bailout. He said there has been a “media campaign to undermine the government of Catalonia and that of Spain.” Homs said the region would not have to make any additional fiscal adjustments to receive assistance. “Only a few days ago we approved an adjustment plan, and the central government has already been monitoring our accounts for many months.”

Catalonia has to meet 5.755 billion euros in debt maturities in the second half of this year and has started negotiations to refinance an 800-million-euro syndicated loan.