Just over two weeks remain before unveiling a national budget that is more complicated than any other in recent memory, the Spanish government has many available e options for achieving the ultimate goal of cutting the national debt by 35 billion euros, down to 5.3% of the GDP, in line with what it promised the EU on Monday night that it would do.
In this sense, before cutting the budget by another 0.5%, the government has already tried to slash monetary advances that the state provides each year to town councils and even regional governments, because it anticipates lower tax revenues once final revenue figures are tallied.
The Ministry of Finance proposed this plan in a meeting with local representatives, the National Commission of Local Administrations (CNAL following the Spanish abbreviation) that was held recently on March 7, according to sources familiar with the meeting. The proposal would pass because the Spanish government would slash the anticipated advances, by around 98% that it provides for local and regional governments so that the national government can increase the non-financial portion of its revenues.
Annually these advances total to 95 billion euros. 80 billion flow to regional governments and around 15 billion to town councils.
Discussing how these figures could be used to reduce the monetary advances was then premature. Still, the proposal to lower the advances by 98% is to go forward, according to the sources already mentioned. For the town councils, this would be around 1 billion euros, but for the regional governments the figure would be upwards of 5 billion euros. Explaining to an audience of the National Administration Commission how the plan would work, the Ministry of Finance even proposed offering some sort of compensation for this year that is independent from a possible increase to Special Taxes (Impuestos Especiales in Spanish), antiquated taxes based on certain consumable goods.
Provider plan
Equally, the national government held and still holds that the Cabinet has enacted several measures to breathe new life into choking regional governments and town councils. The main measure is a payment plan to providers that will allocate 35 billion euros for town councils and regional governments to clean up their accounts with as many small service provider companies as possible. "It is an enormous operation," Prime Minister Mariano Rajoy said yesterday during a congressional meeting.
