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Catalonia asks Madrid for €5 billion bailout

Source: Reuters - Tue 28th Aug 2012
Catalonia asks Madrid for €5 billion bailout

Catalonia, which generates around 20% of Spain's economic output, will tap a state liquidity line for just over €5 billion, a spokesman for the north-eastern region's government said Tuesday.

The facility will cover financing costs linked to plans to cut its public deficit to 1.5% of GDP this year, as well as maturing debt costs, the spokesman said.

The region would not accept political conditions for the aid, he added.

Of Spain's 17 regions, Valencia and Murcia have also said they would need to tap the fund.

The government said in July it was setting up a mechanism to help the regions repay their debts, using funds from the state lottery and bank loans. But the facility is still not up and running.

Catalonia has called over the past year for the introduction of some form of mutualisation of debt for Spain's regions to help bring down its financing costs.

Catalonia, which is heavily indebted, insists its fiscal position would be better if it were able to create its own tax agency, which it hopes to establish in the future.

Comment on this Story

At the very least the condition should be that the Central Govt controls all regional finances from this point on.
Robster - Wed, 29th Aug 2012
"No Political Conditions" : These Clowns need to decide exactly what they mean next time they bang the old 'Catalonia is not Spain' drum. No ? - Then go and beg somebody else to bailout your deficit then !
Simon Carter - Tue, 28th Aug 2012

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