Catalonia joins Murcia and Valencia in requesting bailout financing

Catalonia accounts for one quarter of Spains economic output

As government officials return from their summer breaks, the situation facing the Spanish economy once again starts to make International headline news, with national British TV today highlighting the ongoing financing crisis facing Spains autonomous regions.

Spains debt-struck Catalonia region announced today that it is requesting a 5.0-billion-euro ($6.3-billion) rescue from the Spanish central government.

The north-eastern regions government, facing huge repayments due on its 40-billion-euro debt this year, said it would request money from an 18-billion-euro liquidity fund set up by Madrid to finance troubled regions.
"The government has decided to request participation in the liquidity fund," Catalan government spokesman Francesc Homs told a news conference.

But the region, responsible for one-quarter of Spanish economic output and in open conflict with Madrid over its deficit-cutting demands, would do so "without accepting political conditions," he said.
Catalonias announcement has yet again highlighted Spains tremendous financial squeeze, fuelling expectations that the eurozones fourth largest economy will be forced to seek a broad bailout -- and soon.

Valencia and Murcia have already accepted that they, too, will need central government help to finance their operations through the rest of this year.
Prime Minister Mariano Rajoy said Madrid would extend a helping hand to Catalonia.

"We will help Catalonia as we help the rest of the regions," Rajoy told a news conference. "The regions are also Spain so the Spanish government will not wash its hands of them."
Catalonias announcement coincided with a visit by European Union president Herman Van Rompuy for the first of a series of meetings held by Rajoy to grapple with the crisis.

The premier will host French President Francois Hollande on Thursday and is scheduled to hold talks with German Chancellor Angela Merkel in the Spanish capital on September 6.
The most indebted of Spains regions, Catalonia is in open conflict with the central government over tough deficit targets that have been imposed on the regions.

Catalonia suspended subsidies in July to hospitals, retirement homes and other social services. It has cut public sector wages, introduced a one euro extra charge for medical prescriptions and frozen infrastructure investments as it seeks to bring its public deficit under control.

This year, repayments due on its accumulated debt amounted to 13.5 billion euros, with 5.8 billion euros yet to be paid in the second half of 2012, according to regional  government figures.

© AFP Reproduced under licence