The Fiscal and Financial Policy Board met yesterday and leaders were clear about one thing: the Spanish national government will force its regional governments to keep its budget at 1.5% of GDP and will be inflexible with the next round of financing to creditors who are weighed down by public defaults.
In regard to the first point, all regional governments will have to ensure that their annual budgets are no greater than 1.5% of GDP through 2012. This figure is up from 1.3% in 2011 when, finally, regional governments lowered their debt by 2.94%. Only Andalusia, where the PSOE is in the majority, voted against regional government elections that are just around the corner. The Canary Islands and Catalonia abstained from voting, and the Basque country, unable to vote and governed by the socialist party, disapproved a proposal even though it does not directly affect its policies.
Even though the national government refused to budge, Montoro said that it has not defined a framework or action plan for the regional governments to undergo cutbacks. He insisted that regional governments should decide for themselves how to proceed with budget cuts.
The only common feature of the national government's demands is that all regional governments comply with the 1.5% budget goal. Montoro stressed that the Navarra government has voted in favor of the proposal. Secretary of State of Public Administrations, Antonio Beteta, insisted that the Basque government has already complied with the 1.5% restriction in line with its own statutes and laws.
Basque does not have a vote, yet they oppose the proposal. Montoro insisted that the national government laments Andalusia's opposition. The region is going against the austerity that is needed to reinvigorate the economy. "We are asking Andalusia for their invoices to ensure transparency on all sides and that service providers can be paid," he said.
