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Zapatero warns regions to slash spending

Source: AFP - Mon 17th Jan 2011

Spain's PM has warned autonomous regions to curb public spending or face a government crackdown, in an interview with the Financial Times published on Monday.

'At the end of the day, who is accountable, who is responsible?' Jose Luis Rodriguez Zapatero told the FT.

'It's the central government, isn't it? And we have to spearhead, lead the way forward with the control of public spending for the autonomous regions. And they have to deliver. They have to fulfil those obligations because if they don't, the government will act.' Spain's 17 regions have considerable autonomy, with the right to issue bonds to finance their expenses.

They account for around one-third of general government expenditures - and just over half of the nation's total number of civil servants. But the freedom extended to autonomous regions complicates central government efforts to trim the deficit.

Spain's crisis-struck regions have rolled up a combined 105 billion euro debt, heightening concerns about the prospects for the entire country's finances.

Last May, the New York-based credit rating agency Standard and Poor's forecast that Spain's regions would register their worst budget performance in recent history in 2010.

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