Madrid. Spain's central government may impose budget curbs on regional authorities as soon as next month in return for extending them credit lines, a government source said yesterday, an effort to placate markets as the cost of borrowing hits dangerous levels. Spanish 10-year government bond yields broke through the 6 percent mark yesterday for the first time since the beginning of December. Spain has acknowledged that it has probably tipped into its second recession since 2009. The conservative government says it is committed to making major budget cuts. But concern is growing on financial markets that the recession will make it impossible to meet deficit targets and that Spain will have to seek some kind of an international bailout, like Greece, Ireland and Portugal. The 17 autonomous regions account for around half of public spending. They are expected to lower their own deficits to 1.5 percent of GDP by the end of the year from 2.9 percent. I wouldn't be surprised if we had to intervene as some (regions) do not have access to capital markets. So we will have to take the budget path together. The word intervene' sounds weighty, but they would accept the help willingly as they won't have funding on markets, t h e high ranking source said. The 1970's Constitution gave the regions a lot of power over their own budgets, but their inability to rein in spending after a decade-long country-wide property boom has spooked international investors. Regions have to present their plans to make savings of around 15 billion euros ($19.62 billion) in the first two weeks of May a n d the government could take action on plans not meeting requirements almost immediately, the source said.
Government set to impose regional spending curbs
18/04/2012 00:00
Also in News
- Important information for British travellers arriving at Palma airport from April
- Passengers advised to head to Mallorca airport three hours before flights
- Former England, Newcastle and Liverpool star a winner in Mallorca
- Mallorca restaurant concerns about lack of Easter bookings
- Rafa Nadal expands his property empire
No comments
To be able to write a comment, you have to be registered and logged in
Currently there are no comments.