How To Guides
- Childbirth & Education
- Legal Formalities
- Pensions & Benefits
- Property & Accommodation
Did you know...?
- Airports and Airlines Spain
- Paramount Theme Park Murcia Spain
- Corvera International Airport Murcia Spain
- USD weekly currency update- 27 May 2016
- When Expat Eyes Are Smiling
- Meet Wincham at The Homes, Gardens & Lifestyle Show, Calpe
- QROPS 2014
- Spain Increases IHT in Valencia & Murcia
- Removals to Spain v Exports from Spain
- The Charm of Seville
- Gibraltar Relations
- Retiro Park : Madrid
- Wincham announce opening of Marbella office
- Community Insurance in Spain
- Calendar Girls
- Considerations when Insuring your Boat in Spain
- QROPS – HMRC Introduces changes that create havoc in the market place
- QROPS – All Change From April 2012
Spain struggles to meet regions' 36 bln euros debts
Top Spanish officials are at odds over how to help the country's highly indebted regions refinance €36 billion of debt this year, government sources told Reuters on Wednesday.
This figure, which was revealed in the budget plans from 17 autonomous communities, compares with previous public data of around €8 billion of bonds maturing in 2012.
The difference is due to bilateral loans from Spanish banks to the regions worth €28 billion that were not made public previously, and it could unnerve further investors concerned by the capacity of Spain to curb its public finances and reform its banking sector.
Spain's weak banks and overspending regions are at the heart of the euro zone debt crisis due to concerns that expensive bail-outs of ailing lenders, such as the country's fourth largest lender Bankia, could force the country to seek international aid.
Spain's government last week admitted its 2011 public deficit was higher than it had previously reported after 3 regions adjusted accounts.
The government sources said the central administration now aimed at putting forward a new mechanism to back regions' debt as soon as early June.
But, the sources said, Economy Minister Luis de Guindos and Treasury Minister Cristobal Montoro disagreed on the final form the new instrument should take.
De Guindos favours a centralised mechanism which would control and issue debt for the regions while Montoro would rather see a less intrusive instrument which would fall under the umbrella of his ministry and based for instance on credit lines from the central government to regions which meet their deficit targets.
"Montoro is the one who has to deal with the regions and make sure that they meet their deficit targets. You can't tell them on one side that they have to be austere and on the other side give them unlimited liquidity," one of the sources said.
CATALONIA AND VALENCIA
After weeks of negotiations, Montoro last Thursday gave his blessing to spending cuts plans presented by all 17 regions except for the small north-western one of Asturias, which will have to present a new budget within 15 days.
The regions account for around 50% of the country's overall public spending and are responsible for their healthcare and education budgets, where cuts are likely to fall.
The central government has authorised them a deficit of €15 billion this year, bringing their funding needs to €50 billion overall.
Their commitment to savings costs this year will be key to helping the country try and meet an ambitious target of slashing the public deficit to 5.3% of GDP this year from 8.9% in 2011.
The situation is however especially difficult in Spain's 2 most indebted regions, Catalonia and Valencia, which account for about 60% of all regional debt maturing this year, the data released by the regions show.
Both autonomous communities needed to refinance more than €10 billion this quarter and more than €8 billion in the second half of the year.
Earlier this month, Valencia had to pay a very high price of 7% to refinance €500 million of debt with a six-month maturity, fuelling concerns internationally about the sustainability of the country's finances.
The risk premium investors demand to hold Spanish over German debt remained steady at around 484 basis points on Wednesday after reaching last week record highs at over 500 basis points.
Latest News & Stories
- Facebook and Microsoft to install “megacable” between Spain and US
- Vodafone Spain to start offering Telefonica indirect fibre
- Spain arrests 30 suspected of laundering money in bitcoin centres
- Passenger flight dodges three drones before landing in Bilbao
- Almost 30% of Spaniards at risk of poverty or social exclusion
- Spain tops euro zone for political risk to the economy, says ECB
- 30 arrests in Spain for pay-TV piracy
- Spain's centre-right PP to strengthen position in election - poll
- Popular Party faces freeze on assets if it fails to pay €1.2m civil bond
- Dacion en Pago : Handing Your Property Back to the Bank
- What is the Euribor ?
- When you can’t pay the Mortgage