Jo Green

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By Jo Green - Sat 11th Feb 2012

 

Valencia is apparently the most indebted of all of the Spanish regions, with debt currently standing at around €20 Billion.

Just this morning it was announced that, between them, Valencia and Andalucia owed Pharamceutical companies some €6 Billion in unpaid debt going back as far as 2 years.

At the end of last month Moody’s credit ratings agency downgraded the region from BA1 to BA3, showing plummeting confidence in the finances of the Autonomous Community.

By comparison, the UK has a credit rating of AAA and Spain as a whole has a rating of A1, with a negative outlook.

The Countries of Angola and Bangladesh have the same credit rating as Valencia.

Barely three weeks ago the region had to turn to the central government for help at the 11th hour to prevent them from defaulting on a loan of €123 Million to Deutsche Bank. Repayment of the loan was already 1 month overdue.

The so-called ‘Patriot Bonds’ issued by the regional government, where residents could purchase ‘Debt’ for a yield, was only 58% subscribed, showing how even loyal and proud Valencians were struggling to have confidence in the finances of their own region.

So you can imagine that the loan from central government probably came with a list of conditions attached – notably demands that the region introduced stringent measures to reduce public spending with immediate effect.

So perhaps it was no coincidence that my daughter was sent home with a letter last week advising that the school was having great difficulties as its already tight budget had been slashed. It didn’t make any grim announcements as such, but certainly paved the way for ‘bad news’ re: cuts in the coming weeks.

Aside from the teaching staff having their hours increased and salaries cut, rumours around the playground were mentioning heaters being turned off, classes being amalgamated, a total ban on non-essential services - such as photocopying etc... And an immediate end to all plans for any future school trips. There were also whispers of the other schools in the valley having a temporary closure, and being moved to the larger school as a measure to pool resources and save money.

Loathe as I am to listen to, or worry about rumours, I do know that this had indeed been happening elsewhere in the region, so it is a distinct possibility that it wasn’t just posturing by the school authorities – it could still happen !