The Catalan Parliament allows the Catalan Government to issue new debt

Barcelona (ACN).- The Catalan Government received the green light from the Catalan Parliament to issue new debt and solve the current lack of cash. Once the formal approval of the Catalan Government’s austerity plan by the Spanish Ministry of Economy arrives –which is expected in the next days or weeks–, the Catalan Executive will know which way to go with regard to the financial markets and ask for credit. The Parliament allowed the Executive to initially issue new debt for 2,613 million euros. However, the Catalan President, Artur Mas, and later the Catalan Ministry for Economy, Andreu Mas-Colell, explained that during the entire 2011, the Government will have to issue new debt for a total amount of 11,000 euros. This new debt will be used to pay 3 main parts: the deficit excess from 2010 (3,500 million euros), the 1.3% deficit from 2011 (2,600 millions) and the debt loans expiring this 2011 (around 4,600 millions). The Catalan President, Artur Mas, justified issuing this new debt urgently because otherwise the Government will not have cash to pay bills from 2010 and current salaries. Mas emphasised the urgency of this new debt and accused the former Left-Wing Catalan Government of “driving us [Catalonia] to bankruptcy”. The opposition protested that the Catalan Government has not shown the austerity plan and asked for a debate in the Parliament. However, the main opposition parties supported the Government’s initiative due to the exceptional circumstances.

The new Catalan Government, from the Centre-Right Catalan Nationalist Coalition Convergència i Unió (CiU), presented its first law proposal to the Catalan Parliament during this term. It was presented via an urgency procedure that does not allow the rest of the groups to amend the proposal. They can only vote on the initial text proposed. The debate and the voting took place today and it was approved with the votes from CiU, as well as a large part of the Opposition.

The Catalan Socialist Party (PSC) supported the Government “as the logical” thing to do, considering the extraordinary circumstances. However, the PSC emphasised that today’s votes do not show any acceptance of the Government’s overall economic policy or any complicity. The Conservative and Spanish Nationalist Catalan People’s Party (PPC) also voted affirmatively, after criticising the PSC and the current Government. The PPC accused CiU and PSC of complicity and the latter of having created an enormous deficit in the Catalan budget. The Left-Wing Catalan Independence Party (ERC) voted in favour because of “rigour and coherence”. All these forces represent almost 90% of the Catalan MPs.

The Catalan Green Socialist Party (ICV) said that they understood the need to issue new debt but that they were completely against the cuts in social expenditure and other decisions that were made during the new Government’s first few weeks. Therefore, ICV decided to abstain. The two minority and populist parties voted against for completely different reasons. SI, a party that wants to declare the Catalan independence unilaterally and immediately, considered that the Catalan President “begged” the Spanish PM asking for permission to issue the debt. C’s, an anti-Catalan Nationalism and Populist Party, explained that they were voting against as they “did not want to give a blank cheque” to the Government.

The leader of the Catalan People’s Party denies any privilege for Catalonia

Alícia Sánchez-Camacho, the leader of the Catalan People’s Party, contradicted her party colleagues from the rest of Spain who were accusing Catalonia of receiving privileges from the Spanish Government yesterday. The Catalan President thanked Sánchez-Camacho for her gesture and puts her as a model for her Spanish colleagues from the People’s Party (PP).

Many local leaders from not only the People’s Party (PP) but also from the Spanish Socialist Party (PSOE) were protesting loudly and accusing Catalonia of receiving privileges. Even Navarra, which together with the Basque Country is the only Autonomous Community that has a complete fiscal autonomy and that contributes much less to fiscal regional redistribution considering its wealth, protested. Later in the evening the Spanish Ministry of Economy confirmed that Catalonia did not receive any privilege and that other Autonomous Communities would also be able to issue new debt if they see their viability and austerity plans approved (engaging to keep their 2011 deficit at 1.3%) and if they use the new debt to refinance the expiring debt and the deficit. Today, Prime Minister José Luís Rodríguez Zapatero insisted on this line, claiming for “rigour” and articulating that yesterday’s statement from other Autonomous Communities and also Madrid’s Mayor were lacking rigour and that they were just looking at local and regional elections scheduled in May, hoping to get better results by waving the anti-Catalan flag.

New debt to ensure the Government’s functioning

The Catalan Minister for Economy, Andreu Mas-Colell, emphasised that the new debt is a “normal exceptionality”, as the budget for 2011 was not approved due to the Catalan elections and the budget for 2010 has been extended until the new budget is approved. Mas-Colell insisted that the law authorising issuing new debt is framed “in a wider context than the Government’s economic policy, which is a context of responsibility to guarantee the Government’s correct functioning and the public services”. The law allows the Government to issue new debt, in any kind of modality, during the entire 2011, until the new budget is not approved and for a maximum amount of 2,613 million euros. The cash received will be used, explained Mas-Colell, to face payments from 2010 (corresponding to the 2010 deficit) and actual investments or capital transfers scheduled in the Catalan Government’s budget. The objective is to ensure enough liquidity to face the payments of the regular functioning of the Government, public companies and all the Catalan public services, which include all the public education and healthcare Catalan citizens receive, for instance.