Avoiding responsibilities is not a good idea
Europe has recently asked the Spanish government, particularly the Spanish Minister for Finance, Cristóbal Montoro, to reformulate the budgetary provisions presented before the Spanish elections by cutting them by up to 8 billion euros. The IMF modified its growth forecasts for Spain after noticing the deviation from the deficit target. The Spanish government’s reaction was, as usual, to transfer the responsibility to the other public administrations. In this vein, a letter was sent to the Autonomous Communities demanding them to make more cuts and threatening them with not paying out the Spanish Liquidity Fund (FLA) if these directives weren’t fulfilled.
The truth is that the Autonomous Communities, which assume most of the social expenditure, haven’t met the deficit target required by the Spanish Government. However, it is more important to remember, even if only as a measure of magnitude, that the Spanish State has never met its deficit target, despite having always taken the most important part of the threshold allowed by the EU. Thus, it is illogical that the Autonomous Communities, whose expenditure accounts for 35% of the total expenditure by the Spanish public administrations would have a 0.7% deficit target for this year and 0.1% for 2017, while the Spanish State, which assumes 55% of public expenditure, keeps 80% of the deficit threshold for 2016 and 96% for 2017. It is clear that the Spanish Ministry for Finance doesn’t follow Europe’s recommendations and makes arbitrary and irrational decisions.
The Catalan economy’s results have been very positive in the last months. In 2015, it grew by 3.4%, the highest rise since 2007. In the last trimester of the year, it grew by 3.9%, mainly due to exports, which reached historical figures, an increase in revenue from the tourism sector, and the impact of foreign investment, which continued to grow.
However, such dynamism is not transferred to the citizens because the Catalan government doesn’t control its revenue and, moreover, is continuously hampered by the Spanish government’s decisions. The Spanish Ministry for Finance keeps advanced payments from the funding system low thus impeding Catalonia from having its own money until two years later—, distributes the deficit threshold unfairly and doesn’t pay for those obligations established in Catalonia’s Statute of Autonomy. And even despite all this, Catalonia succeeded in reducing the deficit from 4.48% (2010) to 1.95% (2015), which proves the Catalan Government’s willingness. It clearly shows that if the Spanish Government would comply with its obligations, Catalonia wouldn’t have any problem complying with its deficit target.
The Spanish government can keep on spurning responsibility and threatening the Autonomous Communities, but it is the State that has to respond with its reputation before the financial markets, as it is responsible for collecting 95% of the taxes in Catalonia and it is not logical that it renounces its responsibility before the citizens by transferring it to other public administrations.
Besides, it should be taken into account that the debt capacity of the Spanish economy depends to a large extent on the Catalan economy’s growth, which is its driving force. If the Catalan economy doesn’t grow, Spain’s debt capacity as a whole will be weakened. And most curiously, it looks like the Spanish government doesn’t have any qualms about hindering the Catalan economy’s dynamism even though it damages the Spanish government itself. It is vital that the European institutions, the financial markets and the citizens are as aware as possible of this reality, because if the Spanish level of debt doesn’t stop rising, it would inevitably become a problem for the whole of the European Union.
Oriol Junqueras i Vies
Vice-president of the Government of Catalonia and Minister of the Economy and Finance