Catalan government insolvent, up $hit creek, etc etc

But leaking the news just after the Mavi Marmara incident meant hardly anyone noticed.

Photo CC by <a href='http://www.flickr.com/photos/sabeth718/3374150130/'>sabeth718</a>

Photo CC by sabeth718

Elena Moya in the Guardian on May 23:

Catalonia also suffered the S&P axe, as the credit ratings agency said the region’s “high debt burden is likely to persist in the long term”. But the downgrade won’t affect the government’s ability to tap international markets, claims Ferran Sicart, general director for financial policy at the Catalan government. As with other senior civil servants, he faces a possible 15% salary cut as the region tries to shrink its deficit. Catalonia needs to raise €9.4bn this year, almost twice as much as last year, and plans to use its industrial and tourism base, as well as the strong Barcelona brand to attract investors. Catalan officials have now added Japan to the usual roadshow spots of London, Paris and Frankfurt. “The weight of international investors in our public debt has slightly diminished – there’s also more competition, so we have to reach out to investors, through meetings and roadshows,” Sicart says. “We need to raise more money because of a fall in tax-intake, mostly linked to the construction sector.”

Somewhere between May 24-26 somone must have tried and failed to flog Government of Catalonia debt in Tokyo, because on the morning of June 1–when the Spanish media was occupied with the morality of Jew- and bull-baiting–the EFE agency released a piece, repeated without comment in half a dozen MM outlets, which quoted Catalan government sources to the effect that at an unpublicised meeting on May 27 health providers Consorci de Salut i Social de Catalunya and Unió Catalana d’Hospitals, neither of which mention this news on their websites, had been told that their monthly payment of 440 million euros would be delayed by a fortnight (ie paying invoices at 90 days instead of the current appalling and I believe illegal 75).

Apparently they hope to pay on the 30th and be on time in July, which, since we’re in the season of double monthly payments for public servants, seems somewhat far-fetched. But maybe no one will notice they’re not being paid and can’t get treated–we’ve got the World Cup to worry about. And we’re still better off than Aragón’s health system, which at the end of 2009 was almost a year behind on its bills.

I’m not sure what happens next. When Derek Hatton bankrupted Liverpool, he was able to turn to Swiss banks for help, but we’re beyond that point.

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Comments

  1. I was shocked at how governments here use accounts payable as free loans. If governments pay on time, they might actually get the services for cheaper, since the suppliers know they will get paid.

    There was a recent story about how Sant Cugat started paying accounts within 30 days and saw a big improvement on quality and economic benefits (since they people they are paying are in many cases locals).

  2. We’ll be independent next year. Once we’re free from the burden of domination by the Spanish Empire, Cataloonya will be a world-beating example of financial probity. The flag of Paradise has narrow stripes, remember!

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