Following the high level of publicity received recently by pharmacists who have not been paid by the regional governments of Catalunya and Valencia for prescribed medicines dispensed, the government has announced that 3,000 million more euros are to be distributed via the FLA in order to help regional administrations to meet their most pressing payments.
61.6% of this amount will go to the Catalunya and Valencia, and Antonio Beteta, the Secretary of State for Public Administrations affirms that as a result on 2nd July the pharmacists in these regions will be paid all amounts still outstanding.
In general the objective of the new injection of funds is, according to Sr Beteta, to make progress in the payment of invoices, especially to those sectors which are worst affected. The other regions benefitting from this latest distribution of funds are Andalucía (475 million), Castilla-La Mancha (278 million), the Region of Murcia (227 million), the Canaries (78.5 million), the Balearics (59 million) and Cantabria (34 million euros), and in relation to these areas the Secretary of State again stated that the aim is to pay debts related to social services, education and the health service.
The FLA is a regional liquidity fund, often called the bailout fund, as it was set up to help regional administrations acquire liquidity during a time when many were finding it hard to obtain financing at reasonable rates. It is, effectively, a loan at preferential rates, but regardless of its title is helping to regional administrations to continue increasing their levels of indebtedness.
The Banco de España reports that nationwide administrative debt in the first quarter of 2014 rose by 7.12% to 989,925 million euros, the equivalent of 96.8% of the country’s GDP. This is the highest percentage ever recorded in Spain, and the national government itself estimates that by the end of this year it will have risen to 99.5%, meaning that despite claims that the economic crisis is over there is an ever increasing amount of debt to be serviced.
Most of the increase, as usual, is due to central government, where the debt rose by 8.4% over a twelve-month period to 864,193 million euros. This alone equates to 84.5% of GDP. In percentage terms, though, regional government debt grew even more sharply by 16.5% to 221,997 million euros, whereas Town Halls managed to reduced their debts by 4.5% to 40,855 million euros. The remaining 17,188 million euros of debt has been incurred by the Social Security.
Catalunya remains the most indebted of Spain’s regional governments (59,729 million euros, 15.2% more than on 31st March 2013), followed by the Comunitat Valenciana (33,864, an increase of 16.6%) and Andalucía (25,612 million, 24.2% up on last year). In terms of percentage of GDP, the most indebted were Valencia, Castilla-La Mancha, Catalunya and the Balearics.
The largest Town Hall debts, those of Madrid and Barcelona, were both lower than on 31st March 2013, by 5% and 4.7% respectively.
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