Montoro rejects Balearic demand for increased deficit

National finance minister, Cristóbal Montoro, has discovered at first hand how the political situation in the Balearics has changed radically, but his stance was unshakeable: no more deficit will be permitted this year or next year.
The regional minister for the treasury (Hacienda), Catalina Cladera, placed several demands in front of Montoro at the meeting of the Council for Fiscal and Financial Policy, the most urgent of them having been an increase to 1% for this year’s deficit, which has been fixed at 0.7%. Cladera had asked for this increase on account of the fact that in April the accumulated deficit was already 0.4%, and she wanted a similar flexibility to be extended to next year. Provisions for 2016 allow for a deficit of only 0.3%.
The second demand made by Cladera was that reform of  the islands’ financing system should be rushed in. Modification to this had been approved in 2014, but national government was disinclined to effect change because of problems this might have caused with other Spanish regions controlled by the Partido Popular.
Thirdly, Cladera called upon Montoro to immediately convene a bilateral commission in order to resolve the islands’ financing problems and to analyse the approval of a new Special Regime to genuinely compensate the Balearics for the costs of insularity.
These demands, made along with those of ministers from other regions, met with a stubborn response: things will remain as they are and regions will have to make do with deficits defined by the national government. At the end of the meeting, Cladera lamented Montoro’s attitude and his commitment to taking forward any of the proposals. Cladera explained that she had presented a report into the economic situation which concludes that tax raising in the Balearics will be very positive. She added that this improvement has been reflected in the contributions national government apportions to the different regions (a reference to the fact that the Balearics receives less from government than tax raised in the islands because of the system of distribution to poorer regions of Spain).
Finally, she said that she agreed with the proposal from Catalonia for there to be an independent fiscal authority to study this distribution.