The Catalan Government receives the €568 million from the FLA and authorises delayed payments

Barcelona (ACN).- The Catalan Government received the €568 million from the Spanish Executive’s Liquidity fund for the Autonomous Communities (FLA) on Tuesday and has authorised to make the payments pending from September. However, the Spanish Government, which has sent the €568 million after a delay, now imposes a €24 million fine on the Catalan Executive for not having paid September’s Social Security contributions on time. The Spokesperson for the Catalan Government, Francesc Homs, was angry about this fine and said that Catalonia will appeal the decision to the Constitutional Court. According to Homs, the Catalan Government had warned it had liquidity tensions and requested €568 million from the Spanish Government’s FLA in order to make September’s payments. If the amount arrived on the 9^th October, Catalonia could not pay the Spanish Executive the Social Security contributions on 1^st October. However, Homs ruled out the Spanish Government’s delay being a consequence of Catalonia’s self-determination process, as it would be a case of “malfeasance”. Homs understood that the delay was because “we all have difficulties” regarding liquidity. As the Autonomous Communities have no longer access to international financial markets at sustainable interest rates, in order to obtain liquidity to face debt maturities and ordinary payments, the Spanish Government put in place the FLA in the summer, to act as a sort of bank for the Autonomous Communities. Catalonia announced that it would request a total of €5.02 billion for the rest of 2012. Paradoxically, Catalonia is at the same time Span’s richest Autonomous Community, with 19% of the country’s GDP. However, Catalonia suffers from a permanent fiscal deficit, contributing up to 8.5% of its GDP (almost €17 billion) to pay for services and investments made in other parts of Spain. At the same time, the Catalan Government has to undertake drastic budget cuts on public services to meet the strict deficit targets imposed by the Spanish Government.

Criticism of the situation

Managers of private social centres said they are worried about this “uncertainty”. They stated that this situation is “unsustainable”. They consider the payment delays to be “inadmissible” as they put public services that have to guarantee basic services in danger. The leader of the main opposition party in Catalonia, the Catalan Socialist Party (PSC), Pere Navarro, accused the Catalan Government of “not managing the liquid assets properly”, although he also criticised the Spanish Government for “not meeting its obligations” and guaranteeing that the FLA has enough funds. The People’s Party (PP) emphasised that the Catalan Government will be able to make payments “because Spain gives the money Catalonia needs”. He also accused Homs of diverting attention with “false arguments” as it is “the Catalan Government’s responsibility being a doubtful debtor” with Social Security, managed by the Spanish Government. In addition, the Catalan Green Socialist and Communist Coalition (ICV-EUiA) asked for an explanation of the exact conditions for such a “bailout”, which should not be “a taboo word” according to them.

The payment from the FLA arrived late

As the Autonomous Communities no longer have access to international financial markets at sustainable interest rates, in order to obtain liquidity to face debt maturities and ordinary payments, the Spanish Government put the FLA in place in the summer, to act as a sort of bank for the Autonomous Communities. Catalonia announced it would request a total of €5.02 billion for the rest of 2012. Of this amount, Catalonia had requested €471 million to face September debt maturities and €560 million to face ordinary payments. The first amount arrived on time but not the second one.

Some payments to be made by the Catalan Government to private healthcare, education and social centres receiving public funds could not be issued on the 1^st of October since the amount requested from the FLA had not arrived yet. The Catalan Finance Minister, Andreu Mas-Colell, urged the Spanish Government a few weeks ago about the need to receive the money on time. Mas-Colell warned that, in case the money did not arrive on time, the salaries were guaranteed but not other payments. Since the Catalan Executive could not pay part of the money owed to social organisations on time because the Spanish Government had not sent the €560 million on time, it decided to delay the payments of the Social Security contributions, managed by the Spanish Government.