Twelve CCAAs (Commercial Collection Agencies) have made plans to re-balance accounts and adjust their debt to 1.3% of regional GDP. The strength to discipline regional government accounts is a positive turn for our national image and our ability to meet recovery goals. The EU and markets will notice. But the process will not end so well if the deficit is merely moved around and not paid off.
They are exchanging deficit for debt. The average rate of increase of their debt is 18%. Although it is not at unsustainable levels today, Catalonia's resorting to 'patriot bonds' is not a solid paradigm. This recourse, swapping deficit for debt, should not be allowed. The only way out is what we all know already but few have attempted to do: cut back, rationalize and cut spending and squandering.
