Regions to receive less than they asked for from bailout fund

Central government to hand over four billion euros less

Madrid -

Cash-strapped Spanish regions that have tapped the central government’s Regional Liquidity Fund (FLA) expect to receive only 12.8 billion euros of the 16.9 billion they have requested for this year, according to figures supplied by the regions.

The deadline for requesting funds from the FLA, which has a kitty of 18 billion euros, is midnight Monday. The government has announced it intends to increase the FLA pot to 23 billion euros next year.

The government has prioritized meeting its deficit-reduction target for this year of 6.3 percent. The regions have been cut off from the wholesale markets because of the spike in Spain’s risk premium.

Catalonia has requested 5.433 billion euros, but that figure was reduced to 5.370 billion, of which the region will receive close to 90 percent. Andalusia has asked for 4.906 billion euros but will only get 2.133 billion for the moment, while Valencia will receive somewhat more than 70 percent of the 3.5 billion euros it requested. The other regions that have sought funds are: Murcia, the Canary Islands, the Balearics, Asturias and Cantabria.

Madrid has opted not to tap the FLA. It recently managed to issue 1.452 billion euros in debt to an international investor under a bilateral arrangement, meeting all of its funding needs for the year in the process.

The regions have 10 years to pay back the loans from the FLA with a two-year grace period. They will pay what the national Treasury pays to issue debt plus a premium of 30 basis points.

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