The Catalan Government had a €42 billion debt at the end of March but its increase significantly slows down

Madrid (ACN).- Catalonia’s debt continues to increase pushed by the public deficit, but it slows down its growth significantly, according to data released on Friday by the Bank of Spain. In the first quarter of 2012, the Catalan Government’s debt increased by €222 million (a 0.5% increase), while it had grown by €2.34 billion over the same period in 2011 (a 6.9% increase). With this last increase, the Catalan Government’s debt reached €42 billion at the end of March 2012. It represents 21% of Catalonia’s GDP, while the Catalan Government is in charge of almost half of public spending and manages healthcare, education and other Welfare State basic policies. The entire public sector in Spain had a public debt of €774.55 billion by the end of March, which represents 72% of Spain’s GDP. €592.57 billion corresponded to the Spanish Government, which manages half of public spending. However, it is responsible for 76.5% of the country’s public debt. The accumulated debt of the Autonomous Communities at the end of this year’s first quarter represented €145.12 billion. In these 3 months, the Spanish Government’s public debt increased by 6%, while that of all the Autonomous Communities combined increased by 3.59%, and that of local governments by 4%. Catalonia’s debt increased by 0.5% compared to the figures from December 2011, when the Catalan Government’s public debt represented €41.778 billion (20.7% of Catalonia’s GDP). However, Catalonia continues being the Autonomous Community with the highest debt, although it is also the Autonomous Community with the highest GDP and with the highest regional budget. It accumulates 29% of the Autonomies’ debt (while the Catalan economy represents 19% of Spain’s GDP). At the same time, Catalonia has been giving each year, for the last two decades, 8.5% of its GDP to pay for services and investments made in the rest of Spain, according to official studies.

The Catalan Finance Minister, Andreu Mas-Colell, has justified the debt increase because “it is directly related to the deficit”, which despite its reduction, continues to exist. Mas-Colell stated that the public debt figures mean that the Government is “obliged to continue its efforts”, because “the battle is not yet won”. Nonetheless, Mas-Colell, reminded that the debt is measured at international level to the country’s GDP, and therefore if GDP increases, debt diminishes. It is another reason to work for economic recovery and growth again, stated Mas-Colell.

Asked about the Catalan Government’s access to international markets and its difficulties to obtain or renew loans, Mas-Colell explained that “in the current circumstances, the moments are very short and within a 15-day horizon, everything might be very different”. However, “while markets are not reopened again [for the Autonomous Communities], the Autonomies’ debt will need a guarantee by the Kingdom of Spain”, he underlined.

CatalunyaCaixa will not shut down

Mas-Colell also talked about the announcement made by Joaquin Almunia, Vice President of the European Commission in charge of Competition policies, stating that Spain might have to let some of the nationalised banks go bankrupt. Mas-Colell assured that the Spanish Economy Minister, Luís de Guindos, had told him that this will not be the case of CatalunyaCaixa. “CatalunyaCaixa will not be shut down”, said Mas-Colell, who is convinced that another bank will buy the entity.