On Thursday, before entering into the Council of Financial and
Fiscal Policy (CPFF), which gathers together the Spanish Finance
Ministry and the Finance Ministers of the Autonomous Communities, the
Catalan Minister, Andreu Mas-Colell, admitted that Catalonia would not
be able to meet the strict 1% deficit target of 2014, which was
unilaterally imposed by the Spanish Government. "This 2014 we will keep
things going, but everybody knows that we will not reach a 1% [deficit
target] and we will go above it", stated Mas-Colell. In fact, the
Catalan Finance Minister had already announced in 2013 that the 1%
deficit for 2014 was not realistic. In the past few days, he has been
insisting that the Spanish Government o relax this target or grant the
Autonomous Communities greater resources, considering that the economic
recovery is improving.
This 2014, despite the economic recovery and the increase of tax
revenue, the Spanish Government reduced the funding of the Autonomous
Communities through the regular inter-territorial transfer scheme. The
Catalan Government, for instance, will have 500 million less in revenue,
while it will have a stricter deficit target than in 2013. Therefore,
it will be obliged to undertake further budget cuts or to not honour a
deficit target unilaterally imposed by the Spanish Executive, which is
the one unilaterally deciding to reduce regular transfers as well. This
week, both the Catalan President and Mas-Colell having been highlighting
that after 4 years implementing drastic austerity measures, further
budget cuts cannot be undertaken without dramatically damaging basic
public services such as healthcare and education, which are totally
managed by the Catalan Executive.
On Thursday, in the CPFF, the Spanish Finance Minister, Cristóbal
Montoro, announced that Autonomous Communities would only have to pay a
1% interest rate for the loan from the FLA. Therefore, the Spanish
Government did not relax the deficit target, neither directly gave the
Autonomous Communities a greater amount of resources. However, the
modification of the interest rate will represent a significant saving
for all the Autonomous Communities in 2014, going beyond €2 billion. In
Catalonia's case, it will represent saving some €700 million. However,
the Catalan Finance Minister is sceptical about it since the saving is
still under the FLA framework, which totally controls the Catalan
Government's cash-flow. Mas-Colell stated that this way of granting more
resources to the Autonomous Communities follows a "recentralisation"
logic which has been in place for the last 3 years.
