Spain to Probe Accounts as Hidden Catalan Spending Revealed

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  • Extra spending uncovered as Europe questions deficit goal
  • Spain was fined for misreporting budget data in July

The Spanish government will start an investigation of regional government accounts after 1.32 billion euros ($1.5 billion) of unreported spending by the Catalan government came to light, the Budget Ministry said in an e-mailed statement.

The Catalan government’s additional 2013 expenditure on highways and prisons in 2013, was only reported to Spain’s statistics departments earlier this year, the Budget Ministry said. The investment will be included in the country’s 2015 accounts along with 200 million euros of undisclosed spending by Zaragoza city hall on a tram project.

Spanish government is disclosing the accounting oversight two weeks after the European Commission raised concerns about the ability of the fourth-largest economy in the euro region to comply with its budget deficit targets of this year and next. The Catalan government is challenging the central government by creating state structures including its own tax agency as part of a drive for independence led by its President Artur Mas.

Reacting to the news, a spokesman for the Catalan government said the region’s data is “transparent,” and that the discrepancy is between the Spanish comptroller office, which oversees the accounting of Spanish public administrations, and the Luxembourg-based Eurostat office.

Meanwhile in Madrid, the Budget Ministry said it remains committed to complying with its budget-deficit target of 4.2 percent of output for 2015. In July, Spain became the first European Union state to be fined for misreporting budget data in a landmark ruling over incorrect statistics.

The government was told to pay 18.9 million euros for the manipulation of deficit data in the region of Valencia, the European Council said at that time after a recommendation made by the European Commission in May.