- Regional government seeking to extend $1.8 billion of loans
- Madrid officials must approve plan under regional rescue terms
Catalonia’s plan to extend the maturity of 1.6 billion euros ($1.8 billion) of bank loans that come due this year is being delayed by Spain’s central government, a spokesman for the regional administration said.
Under the terms of its 2012 bailout from the central government, Catalonia needs the approval of the caretaker government in Madrid before it can implement the changes and the plan has still to go to the cabinet, Catalan spokesman Albert Puig said by phone Wednesday.
Four banks that lend to Catalonia have agreed to the proposal, Puig said, declining to identify them. He also said that de Guindos has indicated that he will recommend allowing the plan to go ahead. A spokeswoman for de Guindos declined to comment when contacted by Bloomberg.
Puig denied a separate report in the Spanish media that Catalonia risked being classed as in selective default by credit rating company Standard & Poor’s. S&P didn’t respond to a request for comment.
“What we want to do is extend the payment over the longer-term, for that we need the acting government’s approval,” he said. “If we don’t get it, we’ll pay it when it’s due. There is no scenario where Catalonia doesn’t pay its debt.”
Catalonia’s debt burden is a source of political tension between officials in Barcelona and Madrid as regional leaders agitate for independence. Spain is Catalonia’s biggest creditor and Catalonia also accounts for about 20 percent of Spain’s output.
Puig added that Spanish Budget Minister Cristobal Montoro and Catalan leader Oriol Junqueras will be meeting on Friday to discuss technical details about the plan. Junqueras met De Guindos on March 8. Commenting on the meeting, De Guindos said on March 14 the central government would always stand by all regions should they need help.
Catalonia currently finances itself through a national liquidity fund, known as the FLA in Spanish, managed and controlled by the central government. Officials in Madrid argue that strict controls are needed to ensure that no funds are used to pay for the push for independence. The Catalan government says that delays in transferring funds have piled pressure onto basic public services.