Spain's Catalonia needs $15 bn to fix 2011 economic woes

8th February 2011, Comments 0 comments

Spain's Catalonia region, traditionally the country's economic powerhouse, faces grave financial difficulties and needs 11 billion euros ($15 billion) this year, its premier said Tuesday.

"Catalonia has major financial problems (and) ... must appeal to the financial markets this year for 11 billion euros," Catalan Premier Arturo Mas said.

Mas is negotiating with the Spanish government to receive authorisation to sell government bonds despite budget restrictions imposed on the regions by Madrid.

Mas, who was elected head of the Catalan nationalist CiU party last November, met for two hours on Monday with Spanish Prime Minister Jose Luis Rodriguez Zapatero.

He received permission to issue bonds worth 2.5 billion euros in the next few weeks, "which will permit an easing of the financial difficulties," he told Catalan radio Rac1.

Zapatero has imposed strict debt limits on Spain's autonomous regions as part of austerity measures introduced last year aimed at reining in the country's public deficit from 11.1 percent of economic output in 2009 to 9.3 percent in 2010 and 6.0 percent in 2011.

His government also wants to slash the deficit of the regions from 1.92 percent of Gross Domestic Product in 2009 to 1.3 percent in 2011.

Catalonia, Spain's second most wealthy region after Madrid, pushed up its direct and indirect debt by 24.2 percent over a year to 29.5 billion euros as of the end of June 2010.

At the same time, the Catalan economy, built on small- and medium-sized businesses, shrank 4.7 percent last year according to Spanish savings bank-funded think tank Funcas, compared to decline of 3.8 percent for Spain as a whole.

© 2011 AFP

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