Government is determined to wrestle with the autonomous communities, first-level political divisions in Spain. But before anything happens, it is necessary to know just how much they communities owe. Thus, a line of credit could be opened with ICO to finance the autonomous communities so that they can pay down accumulated invoices, alleviating a chain of default payments that are damaging the real economy.
Doing so could avoid the constant appeals for credit that autonomous communities are directing at the markets and the banks, tactics that are damaging Spain's reputation outside the country. Further, using the ICO could provide the national government with greater control of the community accounts.
Further, the national government will free up around 8.6 billion euros that they promised to the CCAAs in 2010 and advances worth nearly 50% of the amounts received in July. Does that mean that they will ask for money again when the middle of the year rolls around? And will the ICO really be able to attend to these needs when it lacks material and human resources and it is too expensive to ask for financing again? The potential returns on the measures justify the difficulty involved, but the underlying problems will not be fixed. Autonomous communities are still insolvent.
To fix that problem, the national government will give the go-ahead to approve, first, a spending cap for 2012 and, second, establishing a more transparent sanction process. Still, it will be necessary to redesign the system of autonomous communities so that they are truly ready to adjust to the reality of their circumstances.
