budget

As opposed to the rest of Spain, the PP is a small party within Catalonia. In the last Catalan elections, they got their best results ever, increasing from 14 to 18 seats in the 135-seat Catalan Parliament and obtaining 12.37% of the votes. In the last elections, the Catalan branch of the PP , led by Alícia Sánchez-Camacho, focused on immigration and the economic crisis. Now, while they are running the Spanish Government and have negotiated many austerity measures in Catalonia, the PP is focusing on fighting the “independence delirium”, as they call it. All its leaders, including Rajoy, are participating intensively in the campaign. The PP presents itself as the “useful vote” to stop Catalonia’s self-determination process, as they think of Spain as not being a pluri-national state. Polls give them between 16 and 19 MPs and they could become the second largest party in the Catalan Parliament.

With 10 MPs and 7.37% of the votes in the last Catalan elections, the Catalan Green Socialist and Communist Coalition (ICV-EUiA) has been the most vocal opposition to the Catalan Government’s austerity measures, despite being the fourth largest party in the Catalan Parliament. ICV-EUiA is trying to attract those who participated in the numerous anti-budget cut demonstrations, as well as those who attended 15-M Movement protests. Polls indicate that the ICV-EUiA might increase their support but are not conclusive as to what extent, as it seems they could obtain between 10 and 16 MPs. Besides the social and environmental agenda, the ICV-EUiA openly supports Catalonia’s self-determination right and the organisation of an independence referendum next term. However, Joan Herrera refuses to say if he personally supports the push for independence, as he says it would depend on the alternatives offered.

The general strike called at European Union level to protest the austerity measures and support a new strategy to deal with the economic crisis will also affect Catalonia, 11 days before the Catalan elections. Despite coinciding with the official election campaign, unions in Catalonia called for a general strike, arguing that the date had been decided at EU level. The Catalan Government and the main unions have reached an agreement on the minimum services to be provided. Public transportation will work at 33% of its capacity at rush hours, but not at all for the rest of the day. Emergency rooms will work as normal and hospitals will continue to offer indispensable treatments and perform scheduled surgeries. Schools will have the presence of between 17% and 33% of the staff guaranteed. Catalan Police will deploy 9,000 officers to avoid any violence.

Chemists in Catalonia had called to go on strike on Thursday because the Catalan Government owed them two payments for publicly funded drugs. According to the Catalan Government, the payments were delayed as they depended on receiving the funds from the Spanish Government’s Liquidity Fund. The Spanish Government announced this week it was transferring €99 million to the Catalan Government to pay the chemists. However, on Wednesday the chemists decided to maintain Thursday’s strike “as a warning signal” for the uncertainty on future payments and because they have not received yet the promised payment.

The Spanish Prime Minister, Mariano Rajoy, had previously accused the President of the Catalan Government, Artur Mas, of having blackmailed him by trying to “impose the fiscal agreement or accept the consequences” in last September’s meeting, when Mas proposed a specific fiscal agreement between Catalonia and Spain. The Catalan President denied having blackmailed the Spanish PM. According to Mas, Rajoy “did not want to negotiate a fiscal agreement” as he considered that “Catalonia is not as badly treated” as Catalans say. The Catalan President said he explained to Rajoy what would happen “if the answer to all Catalan claims is always ‘no’”. “It is not a threat, it is describing the reality. The President of the Catalan Government’s duty is to inform [the Spanish PM] about Catalonia’s situation” Mas added.

The Catalan Government increased the amount initially requested from the Spanish Government Liquidity Fund for the Autonomous Communities (FLA) adding €410 more million in order to include payments to service providers and local councils. The Spanish Government and the Catalan Executive have included more types of payments eligible for receiving funds from the FLA. At the end of August the Catalan Government requested €5.02 billion to pay for debt maturities and some ordinary payments. At the same time, the Spanish Government does not respect investment agreements in Catalonia and ensures that Catalan citizens suffer from a permanent fiscal deficit calculated to be some 8.5% of the GDP (around €17 billion).

An official study issued by the Catalan Finance Ministry shows that Catalan citizens have given €24.77 billion more to the Spanish pension and unemployment funds than they have received back from it. The study takes into account the contributions of Catalan citizens and companies between 1995 and 2010. Without the Catalan contributions, the Spanish Social Security system would have had a €86.33 billion deficit in the same period. The Catalan contribution to the Social Security system was negative in 1995-1996 and 2009-2010, while between 1997 and 2008 it showed a budget surplus. Without Catalonia, Spain’s Social Security would have only had a budget surplus between 2003 and 2007.

The Catalan Government’s Spokesperson, Francesc Homs, ruled out the Spanish Executive deciding to delay the payment as an answer to Catalonia’s self-determination process, as it would be “malfeasance”. However, he was angry about the €24 million fine the Spanish Government has issued against the Catalan Executive for delaying Social Security payments. Homs considered this delay to be a consequence of not receiving the €568 million on time and announced an appeal to the Constitutional Court. The Catalan Government had requested €568 million weeks ago from the Spanish Government’s Liquidity Fund for the Autonomous Communities (FLA) to face some of September’s payments. However the amount did not arrive on time and payments to private healthcare, education and social centres receiving public funds were delayed.

The Spanish Government states that the money will “start to arrive” next Tuesday. Over the past few weeks, the Catalan Finance Minister has warned about the urgency of receiving the requested €560 million from the Liquidity Fund for the Autonomous Communities (FLA) in order to face all September’s payments. However, the Spanish Government has sent €400 million to pay debt maturities but has not sent the remaining €560 million to pay private health, education and social centres that receive regular funds from the Catalan Executive. All direct salaries have been paid, but not other payments. In August, the Catalan Government requested €5.02 billion from the FLA for the entire year 2012 in order to face debt maturities and ordinary payments, since access to international markets is closed to the Autonomous Communities.

As in the past, Catalonia will not receive the investment percentage it is legally entitled to by the current legislation. Instead of getting 19% of the foreseen investment in infrastructures made throughout Spain, in the Spanish Government’s budget for 2013 Catalonia will only receive 11.9%. Furthermore, essential infrastructures for Catalonia’s economy and Spain’s and Europe’s competitiveness are under-budgeted while the Spanish Government finds the money to build non-priority infrastructures, such as high-speed railways in Galicia. On top of this, only 35% of the public work initially foreseen in Catalonia by the Spanish budget for 2011 was executed, while in Madrid the work executed came to 111%. Besides, the Spanish Government has reduced its funds to Catalan cultural centres and festivals by 70% over two years.

The Catalan President states that, “if the Constitution is always interpreted from a centralist point of view”, “Catalonia will have to quietly and democratically reflect on its own future” as “no legal framework can be eternally used to annul the majority, democratic, and peaceful will of a people”. The Catalan President, Artur Mas, and the Spanish Prime Minister, Mariano Rajoy, met in Madrid 9 days after the 1.5 million strong demonstration for Catalonia’s independence. Rajoy categorically refused to negotiate a specific fiscal agreement between Catalonia and Spain because he said it does not fit into the Constitution. No one from the Spanish Government addressed the press after the meeting.

The Autonomous Communities are responsible for 18.7% of Spain’s global public debt, while they manage around 40% of the country’s public spending. The Spanish Government’s share represents 76.8% of Spain’s global debt, which reached €804.39 billion at the end of June. Spain’s debt is now 75.9% of the GDP. The Catalan Government has a debt of €43.95 billion. The day before, the Spanish Finance Minister announced that the Catalan Government had a 0.59% deficit for the first half of 2012. Furthermore, Catalonia suffers from a structural fiscal deficit due to Spain’s fiscal redistribution scheme, which annually takes away 8.5% of its GDP, a €17 billion annual solidarity contribution.

By the end of the year, Catalonia must meet a 1.5% deficit target. According to the Spanish Finance Minister, Cristóbal Montoro, the Autonomous Community governments are heading “in the right direction” to honour the deficit objective for 2012. The Catalan Government had a 0.38% deficit at the end of July, according to its own sources. This represents a €767 million deficit, while at the end of July 2011 it had a 2.09 billion deficit, which represents a 63% deficit reduction.

The German Chancellor is “impressed” with Spain’s reforms. According to Angela Merkel, the reforms are headed “in the right direction”, they need to be pursued “at all government levels” and they will need “time to show their results”, “as it happened in Germany ten years ago” with their structural reforms. Angela Merkel met with the Spanish Prime Minister Mariano Rajoy in Madrid, the day the European Central Bank announced it was buying sovereign bonds. Merkel stated that reforms have to continue “at all government levels”. The Chancellor also defended the European Union as a project guaranteeing peace and prosperity, and the Euro as “our common currency”.

Board member Toni Freixa announced that FC Barcelona has forecast income of €470 million and outgoings of €427.9 million for the coming year. Therefore, the Catalan club would end the current season with a profit of €35.9 million. The 2011/12 season closed with record profits of €48.8 million against a forecast of €21 million. Besides, the Board will ask the members’ delegates at the club’s assembly to authorise the calling of a referendum on the project relating to the future of the Camp Nou.