Government increases public company debt

Staff reporter The Balearic government will have to resort to extending public company debt in order to be able to finance its programmes in the next financial year. Under 2004 budgetary plans, to be approved by Parliament this Friday, a proposal will include increasing public company debt to 180 million euros. This increase will double the debt approved last year by the previous Socialist government. The present Administration, presided over by Jaume Matas, justifies the move by saying that a considerable economic “hole” exists and that there is no other economically viable way to make more funds available. The present Balearic government is awaiting conclusions of an external audit to be able to evaluate this economic imbalance, which Matas's cabinet claim was created by Socialist mismanagement. Matas confirmed that he is having to resort to increasing public company debt in order to finance projects to which his government is committed. “Financially, the Balearic government is in a very delicate situation”, he insisted. Tax minister, Lluis Ramis d'Ayreflor, supported Matas's comment by reporting that the government will only be able to address its investment programme by pushing up the level of public debt, a measure also adopted by the previous coalition government. Amongst other problems that the new government has had to face is lack of funding to maintain and renovate water treatment plants. The previous Executive had not included in its budget for the year, the 50 million euros needed for this priority project. Another high spend item is the Majorcan railway service. Current budgetary law prohibits the present government from increasing its own available finances which has left it no other choice but to raise publc company debt.