The Valencian government decided to radically change its austerity plan after scraping by with a second "match point." According to government leader Alberto Fabra, the first "match point" was the refunding of national bonds on December 22.
Deutsche Bank denied a renewal for a near-term loan of 123 million euros, sounding the alarms and forcing Fabra to ask Rajoy and the federal government for aid. Rajoy lent a helping hand to Santander last week in saying that he would grant them a loan. The Generalitat said yesterday that its repayments were delayed one week (they ultimately paid on Tuesday of this week), but it denied that it had received any backing from the Spanish Treasury.
The Spanish government has told Fabra that it is prepared to continue helping ailing regional governments, while the Valencian Partido Popular (PP) has taken it for granted that the law will change so that the national government can guarantee regional government debt. National advisor José Manuel Vela demanded these guarantees months ago. That said, in exchange for his backing, Rajoy wants authentic sacrifices and cutbacks even if they are unpopular. These are austerities that Fabra's government has not committed to in the five months that he has been in charge.
Fabra said in his New Year's Speech that all that this has changed. He said that the 15-billion euro budget that was recently passed will be cut by one billion euros through a legal decree that stresses the importance of "sacrifice" by all and "zero wasteful spending." These are more measures to pile on top of plans and promises that have yet to be put into effect.