The Catalan Government requests €5.02 billion from the Spanish Executive but will not accept “political conditions”

Barcelona (ACN).- The Catalan Government announced this Tuesday it will officially apply for €5.023 billion from the Spanish Government’s Liquidity Fund for the Autonomous Commnities in order to fulfil all its financial obligations until the end of the year, since it cannot turn to the international financial markets anymore. However, the Spokesperson of the Catalan Government, Francesc Homs, emphasised that this is not a bailout, since the money requested comes from the Catalan taxpayers. In fact, Catalonia contributes 8.5% of its annual GDP to finance services and investments made in other parts of Spain. The annual Catalan solidarity contribution to Spain is €17 billion. For this reason, and in a context where the Catalan Government is requesting a fairer fiscal agreement between Catalonia and Spain, Homs emphasised that the Catalan Executive will not accept any “political conditions” to receive this financial assistance, beyond the austerity plan for the 2012-2014 period already presented and approved by the Spanish Government. The Spokesperson lamented that the Liquidity Fund was not in place yet and he hoped the Spanish Government will activate the mechanism very soon. In addition, Homs insisted that the Catalan Government, which is run by the Centre-Right Catalan Nationalist Coalition (CiU), will meet the deficit targets. Applying for the Liquidity Fund means that the Spanish Finance Ministry will have access to the detailed accounts of the Catalan Government on a monthly basis and it could implement further budget controls, although it does not represent a direct intervention.

The political reactions

The Spanish Prime Minister, Mariano Rajoy, who is also the leader of the People’s Party (PP), answered that the government he runs “will help Catalonia, as it has helped other Autonomous Communities”. Rajoy avoided starting a controversy and refused to state if the assistance will come with additional political conditions. However, the PP Spokesperson at the Catalan Parliament, Santi Rodriguez, stated that the Catalan Government is not in the position to refuse any conditions and will have to accept “whatever the conditions may be”, although “they will be mainly economic”.  

The Catalan Socialist Party (PSC) warned it wanted to know how the money will be spent before giving its support to the Catalan Government. However, it accused the Catalan Government of carrying out a “suicidal” strategy to get funds.

The Catalan Green Socialist and Communist Coalition (ICV-EUiA) requested the decision to be validated by the Catalan Parliament, as it will have many consequences. They also requested the Catalan President, Artur Mas, to provide public explanations.

The Left-Wing Catalan Independence Party (ERC) lamented that with this decision, the Catalan Government “was giving away the last drop of self-government” it had. In addition, they stated that the political conditions are already known since the CiU voted for the Stability Law that foresees the possible intervention of the Autonomous Communities by the Spanish Government.

Finally, the two minority parties also criticised the decision, but for opposed reasons. The radical and populist Independence Party ‘Solidaritat’ (SI) asked the Catalan President “to resign” for “having sold Catalonia”. Finally, the anti-Catalan nationalism and populist party ‘Ciutadans’ (C’s) stated that this decision “shows the failure of 32 years of nationalist governments”.

“The money we are asking for is the money that Catalan taxpayers pay”

The Catalan Government already announced in mid-July that it was studying to apply for the Spanish Government’s Liquidity Fund for the Autonomies. This Tuesday, the petition has been officially approved by the weekly Cabinet meeting. However, the Catalan Government insisted it would not accept any political conditions in order to access this money beyond the already approved austerity plan for the next two years. Francesc Homs refused to compare Catalonia’s request with the situation Spain is facing to Europe. “Asking for a bailout to Europe or using the Spanish State [to get liquidity] are two different things, because the money we are asking for is the money that Catalan taxpayers pay and that is managed by the Spanish Government. In the case of Europe, the money is not coming from the Spaniards but from other countries”, stated Homs.

Catalonia gives away €17 billion each year to the rest of Spain

In fact, a vast majority of the Catalan political class and the main business associations are denouncing that the Catalan Government suffers from a lack of funding under Spain’s current fiscal scheme. In addition, the Spanish Government does not sufficiently invest in Catalonia. Out from all the taxes raised in Catalonia, the equivalent to 8.5% of Catalonia’s GDP is spent by the Spanish Government to pay for services and investments in other parts of Spain. This fiscal redistribution, which according to the Catalan Government has no equivalent in Europe, means that each year Catalan taxpayers give away €17 billion. The result is that Catalonia, despite being the richest Autonomous Community in Spain, has problems fully funding the basic Welfare State services it provides its citizens, such as healthcare, education, social services, police and prisons. Furthermore, the Catalan economy suffers from a lack of infrastructure investment by the Spanish Government. This structural deficit turns into the Catalan Government’s deficit that, after many years, has left Catalonia with the largest amount of debt among Spanish Autonomous Communities, with €42 billion. However, looking at Spain’s global public debt, the Autonomous Communities have only generated a fifth of the debt, despite being responsible for almost 40% of all the public spending and exclusively managing the Welfare State service except unemployment grants and pensions.