Catalonia to seek five-billion-euro bailout from Madrid

Generalitat will not accept “political conditions” attached to the loan Funds to be used to pay maturing debt

The Catalonia region is to seek a 5.023-billion-euro bailout from the central administration to meet debt maturities falling in the rest of this year, the spokesman for the regional government, Francesc Homs, said Tuesday.

Catalonia had been mulling tapping the Regional Liquidity Fund (FLA) set up by Madrid for financially stressed regions before the summer recess, and has now formally decided to do so.

Homs said that the Generalitat, as the Catalan government is known, would not accept any “political conditions” attached to the loan. Catalonia has been seeking to secure the right to raise and control its own revenues, a privilege granted to the Basque Country and Navarre.

Catalonia has also complained about what it claims is the excess burden imposed on the regions in the government’s efforts to rein in the public deficit, and has had big spending cuts in education and health imposed on it by Madrid.

To seek a bailout from Europe and to tap the Spanish state are two different thing"

“To seek a bailout from Europe and to tap the Spanish state are two different things, because the money we are asking for is what was paid by Catalans themselves [in taxes], and what the Spanish government manages,” Homs said. “In the case of Europe, the money does not belong to Spaniards but to other countries.”

Catalonia’s economic commissioner, Andreu Mas-Colell, said in July that Catalonia would be willing to accept “economic conditions” from Madrid in exchange for a loan but would not accept direct intervention in its finances, a possibility included in the Budget Stability Law, which was passed without the votes of the ruling CiU group in Catalonia.

Catalonia faces debt maturities of 5.755 billion euros in the coming months. With total outstanding debt of some 42 billion euros, Catalonia is the most indebted region in Spain in absolute terms.

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