Andalusia to ask regional liquidity fund for close to five billion euros

Andalusia will “most probably” tap the Regional Liquidity Fund (FLA) being set up by the central government and ask for a loan of 4.906 billion euros, the region’s finance commissioner, Carmen Martínez Aguayo, on Tuesday told Spanish newswire Efe.

The government is currently in the process of setting up the FLA to help out the country’s cash-strapped regions. It is due to go into operation at the end of this month with funds of 18 billion euros. Catalonia, Valencia and Murcia have indicated they want about a combined 10 billion euros from the fund.

Aguayo said there were good and bad points about how the FLA will work, details of which she received from Madrid on Monday. She was pleased to see that the FLA can be accessed to pay suppliers. However, she said there was a lack of clarity about how the FLA was to be shared out.

Of Spain’s 17 regions, Catalonia has already asked for some five billion euros, Valencia wants 4.5 billion and Murcia 300 million. Only three regions -- Madrid, Galicia and La Rioja -- have categorically ruled out tapping the liquidity pot. The funding from the FLA is coming from the Treasury, the state lottery company and commercial banks.

Aguayo said Andalusia’s previously announced request for an upfront payment of one billion euros from Madrid “could be resolved in the next few days.”

The government of Prime Minister Mariano Rajoy has conditioned access to the FLA to regions fulfilling their commitment to reducing their budget deficits to 1.5 percent of GDP.