Catalonia considering financing from the regional liquidity fund, but rejects claims it is seeking a rescue

Barcelona (ACN).- Catalonia is deliberating participating in the Spanish Regional Liquidity Fund but has yet to make a decision, said the Catalan government spokesman, Francesc Homs. Spain has set up a €18bn fund to help autonomous communities that have liquidity problems and cannot pay their maturing debt costs. Homs denied reports that participating in such a fund would equal a rescue of the Catalan economy by Spain. “We have not asked for a rescue. The law makes clear this would only happen on a vote from the Senate”, said Homs, who accused some media outlets of trying to “dramatise” the situation by framing as a ‘rescue package’ something that, according to him, it is not. “Someone is trying to damage the autonomous communities, the Catalan government or the whole of the Spanish state”.

Last Friday, Valencia confirmed that it will seek €3.5bn aid from the Regional Liquidity Fund, and so will Murcia. On Tuesday, the Catalan minister for Economy, Andreu Mas-Colell, said in an interview on the BBC Radio 4 ‘Today’ program that “Catalonia has no bank other than the government of Spain”. “This is life and everybody knows the situation in the markets. We are taxpayers in Spain and it’s normal that we appeal to the banking services of the Spanish Treasury”, he added. However, the government said afterwards that the minister was not referring to any specific aid request and that they are still considering financing from the Regional Liquidity Fund.

Spokesman Francesc Homs added in a press conference that, in the case Catalonia finally decided using the fund, it would not be “the end of the world”. According to him, the liquidity fund is not a rescue package and would not imply new macroeconomic conditions for Catalonia. “We have been following up very closely our finances for months; we are adjusting our budget since several months ago. There will be no new condition”, said Francesc Homs. When presenting the €18bn fund, the Spanish government said that it will only be offered to regions “under strict conditionality”.

“The Government will use, as it has been doing until now, all liquidity instruments available to us”, stated Homs, who added that the €18bn is only a “treasury instrument” that would help Catalonia with its finances and would not mean any kind of political intervention or condition from Madrid. “When the government and the Treasury departments decide about the fund, everything will be made under the same condition as until now”. Catalonia is already forced by the Spanish government to meet a strict set of budget deficit limits by 2012, 2013 and 2014.

Meanwhile, Catalonia is pushing for its right to raise and manage all its taxes, like the Basque Country. In fact, the Catalan parties are meeting on Wednesday to discuss the ‘fiscal pact’ and try to get a united proposal to negotiate with Madrid. The plan of the Catalan government is to finish with the current unfair situation, in which Catalonia contributes much more to the Spanish fiscal pot than what it receives in return. The system in the Basque Country, where there is full fiscal autonomy, has allowed this autonomous community to keep its deficit and debt under control. Even its debt rating by agencies such as Standard & Poor’s is much higher than that of the other regions because of this ‘special’ constitutional set up. Catalonia seeks a new fiscal deal that would see it contributing less than the current 9% of GDP that it sends every year to Madrid.