73% of the Catalan Government's debt is already in the hands of the State

73% of the Catalan Government's debt is already in the hands of the State

73.2% of the debt of the Generalitat, whose liabilities total 78.506 million euros, is already in the hands of the State, according to data from the Bank of Spain consulted by Efe.

As of September 2018, the latest data available, the State had 57,513 million euros of debt of the Generalitat.

The accession of the Generalitat to the Autonomic Liquidity Fund (FLA) and other mechanisms for the provision of liquidity authorized by the State, such as the payment plan for suppliers, has led the State to significantly strengthen its role as the main creditor in recent years. of the Generalitat.

This situation is explained by the fact that the Generalitat has not been able to go to financial markets to attract financing and has resorted year after year to FLA loans.

However, the Government is already considering issuing debt in the financial markets after 2020, although this goal is subordinated to three objectives: to match the deficit target, comply with the spending rule and be able to restructure the debt of the country. Generalitat, which accounts for around 300% of its ordinary income.

Of the 78,506 million debt of the Generalitat accounted for until September 2018, 6,709 million euros correspond to loans from financial institutions based in Spain and another 5,959 million to loans obtained by institutions from other parts of the world.

Likewise, the Generalitat also has debt outstanding in the amount of 4,010 million euros and another 4,315 million of the Generalitat's liabilities correspond to public-private partnerships.

However, the bulk of the Generalitat's debt is already in the hands of the State, specifically the 57,513 million mentioned above, and a good part of it corresponds to the FLA, which was launched in 2012.

Communities adhering to the FLA signed exercise after exercise ten-year loans with the State to cover the deficit generated during the years of the crisis and to be able to attend basic social services.

These loans were granted with the first two years of grace, but after that period the communities had to start paying off capital, and this situation has caused the FLA bill to have grown year after year like a snowball.

Looking ahead to 2019, the Generalitat has announced that in January it will abandon the FLA to finance itself through the Financial Facility Fund (FFF), another liquidity mechanism enabled by the State, as a previous step to return to the markets.

However, the Generalitat will ask this fund for the same amount it had planned to request from the FLA: some 8,071 million euros, in case the deficit of the communities remains fixed at 0.1% of GDP, and about 8,557 million, in case it is expanded to 0.3% of GDP.

However, 6,713 million euros of this amount will be used to amortize loans corresponding to previous editions of the Autonomic Liquidity Fund and other liquidity mechanisms to which the Generalitat adhered, so that the 'invoice' of the FLA will already be between the 78.4 and 83.2% of the money that the Generalitat will request in 2019 from the Financial Facility Fund.

This means, in practice, that the Generalitat, like many other autonomous communities, borrow money from the FLA or the FFF to cover mainly previous loans from these liquidity mechanisms.

Of the 10,069 million that the Generalitat requested from the FLA in 2016, 2,863 million were used to amortize loans from the FLA itself, 28.4% of the total, while in 2017 the FLA bill was already 51.5% and in 2018 rose to 57.8%, according to data from the Department of Economy of the Generalitat.


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