EU Opens Investigation of Budget Reporting in Valencia

The European Union’s executive arm opened a formal investigation into the reporting of spending data by the Spanish region of Valencia.

The probe will focus on possible “failure to report certain health expenditures over many years, and its non-compliance with EU rules for statistical reporting,” Emer Traynor, a spokeswoman for the European Union told reporters in Brussels today. The investigation “does not cast doubt on the accuracy of Spanish national statistics.”

The investigation may undermine Spain attempts to convince investors that its tax-cutting plans are compatible with its EU deficit targets in the face of skepticism from the International Monetary Fund. Valencia is one of six Spanish regions that breached deficit limits last year.

“Valencia will cooperate in the widest possible way to clarify doubts that the European Commission may have about the statistics,” the region’s budget department said in an e-mailed statement. The investigation relates to 2011 and previous years, it said.

EU statisticians last year ordered a so-called ad-hoc visit, a procedure reserved for urgent issues, to assess whether regional officials were complying with recommendations after failing to report all the unpaid bills they had accumulated in 2011, Bloomberg News reported in November.

The investigation into Valencia’s finances is the first to be carried out under new powers to control budget deficits across the region, Traynor said.

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